FTX Fraud Will Recur if No Preemptive Protocol Is Taken: Ripple CTO
David Schwartz, the chief technology officer (CTO) at the Ripple Blockchain, tweeted that while the crypto community might have learned a few mistakes from the FTX incident, one critical lesson would be swept under the carpet.
Schwartz argued that the fraud perpetrated by the FTX exchange would repeat itself unless preemptive mechanisms incapacitate asset managers from speculating with customers’ funds. In his words:
“If you hold billions of dollars of other people’s money for indefinite periods, the temptation to speculate with those funds is irresistible if there aren’t verifiable checks that make such risk-taking virtually impossible. Nothing else will be sufficient.”
The Ripple CTO concluded that the FTX-kind of fraud will always happen unless it cannot happen, regardless of investor due diligence or regulation, because ‘temptation is irresistible.’
This kind of thing will always happen unless it cannot happen. The temptation is irresistable. That is one of the most important lessons of FTX. But most people will actively choose not to learn this lesson because of, among other things, the telephant in the room. 4/4— David "JoelKatz" Schwartz (@JoelKatz) November 22, 2022
Given the repeated cases of bankruptcy filings among major Web3 firms putting investors in significant financial crises, analysts have urged crypto enthusiasts to reduce their reliance on centralized platforms and embrace digital asset self-custody. Changpeng Zhao, the CEO of the largest crypto marketplace, Binance, has previously argued that “crypto self-custody was a fundamental human right.”
Following the monumental collapse of the FTX exchange, Binance announced a partnership with the digital asset security provider NGRAVE to deliver maximum security solutions for crypto users. NGRAVE offers a complete self-custody solution, including the highest security-certified hardware wallet and an encrypted recoverable backup key.
Furthermore, a non-custodial fiat-to-crypto infrastructure, RampNetwork, partnered with two Web3 businesses, Argent and ZigZagExchange, to show crypto users how to take complete control of their cryptocurrency investments.
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