Op-ed: why FTX does not spell the death of crypto

By Philipp Pieper and Timo Lehes, co-founders of Swarm

Sam Bankman-Fried, the once poster boy for crypto regulation by appearing before congress and allegedly donating hundreds of millions of dollars to the Democrat Party, lost his crown and $51 billion worth of collateral from FTX’s balance sheet, leading to the collapse of the world’s second largest centralised crypto exchange in November this year. The dramatic demise of the beleaguered exchange has irrefutably eroded confidence in crypto. The episode was a cruel reminder of how light touch regulation and lack of governance will not suffice in any financial market, not least the $1 trillion crypto industry that is set to grow, as more institutions pile in. These events highlight the lack of transparency as a centralised phenomenon. As Brian Quintenz, head of policy at a16z and ex-CFTC commissioner, has said: “The evil financial trinity of centralization, leverage (collateral), and opacity keep finding ways to blow things up.”

It was those monitoring on-chain activity who pointed out str…