FTX’s collapse this week is “a tragedy and a complete failure of leadership,” Blockchain.com CEO and co-founder Peter Smith told CNBC’s “Closing Bell” on Thursday, but it won’t disrupt the crypto economy by any stretch.
According to Smith, the rapid collapse of Sam Bankman-Fried’s company is helping to bring people back to crypto-regulated institutions and the return of people holding crypto assets on their own keys.
“Crypto is one of the very few things in the world that you can keep to yourself, and I think we’re going to see people move back to that model and move to a model of trusted companies that are in the community,” he said. Smith said.
Smith said that the entire crypto and blockchain economy, and companies like his that rely on private funds, should not face significant obstacles in receiving funds from investors. He said that because of all the fraud – FTX was recently valued at $32 billion even though investors wrote it down to zero this week – FTX was not a market leader or a major player in the crypto ecosystem. According to Smith, it was very popular in Silicon Valley circles, which was confusing to him since investors were happy with a company that had very little control.
FTX’s status will lead investors to pay more attention to crypto companies going forward.
“This was a big play in Silicon Valley, and we saw that it was not going well,” Smith said.
Some experts have suggested that crypto exchange Coinbase may be among the companies to benefit from focusing on regulated institutions. Brian Armstrong, CEO of Coinbasewhich announced further layoffs on Thursday, told CNBC on Thursday afternoon that the job cuts are related to market conditions and the need to manage costs and capital as a public company.
SEC Director Gary Gensler told CNBC on Thursday that the American people should “be careful, be careful. There’s still a lot of non-compliance and when you give someone your trademark, and they go down, you’re going to be lined up in bankruptcy court and they’re probably taking your trademark and doing all kinds of things without proper disclosure.” .Now, if it’s one to the other, and there’s good disclosure, it’s your protection against fraud, fraud, that’s all we’re talking about. What are the protection laws.”
In response to a question about Coinbase and Binance (FTX’s possible acquirers), Gensler added, “I don’t speak to one platform, but I can say that you have these rules and these rules are clear, but you should not do it. I think that these companies are following the rules and regulations of the New York Stock Exchange or major commercial programs are following.”
Armstrong pushed back in his discussion, saying that as a public company, concerns about keeping crypto are “innocuous.”
“We have a one-on-one customer investment,” he said. As a public company, he added, it has financial records audited by the four major accounting firms. “What happened at FTX cannot happen at Coinbase, and we are a regulated entity in the US,” Armstrong said.
Blockchain.com, which came in at number 7 on CNBC’s 2022 Disruptor 50 list, is the company behind nearly a third of all bitcoin networks since 2012.
“The real thing and the coolest part of crypto is that you can store your money on your private key without having to show it to your friends,” Smith said. “And it’s been our mission to make that happen for the last decade.”
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