Bernstein: The Collapse of Crypto Exchange FTX More Like Enron Than Lehman

  • By bitcoincasts
  • November 16, 2022

In a scientific research report on Monday, Bernstein pointed out that the bankruptcy of FTX and Alameda Research did great harm to part of the cryptographic industry Central Finance (CeFi). Part of the cryptographic ecosystem will also be affected by the incident, but not the market as a whole, the report added.

Investment analysts Gautam Chhugani and Manas Agrawal write that the financial (Defi) ecosystem of blockchain technology and the flow of blockchain applications "profit from such vulnerabilities and are subject to some regulatory boundaries and negotiations". Defi is a general term for all kinds of financial applications implemented in digital currency.

Bernstein says it is necessary to distinguish between the centralized escrow participants in the password, namely, exchanges, fund custodians and password financial institutions, because that is the regulatory direction. This will involve maintaining risk reserves and unifying financial requirements on behalf of operating companies, the trader said. The government and regulators may also step up inspections of offshore account exchanges, where regulation is looser, it added.

After the collapse of FTX, Binance's market share is likely to increase, while for offshore accounts may continue to transform its exchanges into a large number of onshore structures along the difficult road, the report said.

The trader feels that the password sales market will be subject to significant liquidity harm in the coming weeks, which will endanger smaller dynamic passwords.

"FTX makes people feel more comfortable than Lehman Brothers," the report said. " FTX is the third-largest exchange, with a market share of only 10%, but it makes more noise, perhaps because of the image of its founder, Rob Bankman-Fried, who is called "the corporate salvation of wizards".

Xinran and Lehman are two years before TradFi created the first digital currency, BTC (BTC), in 2009, a number of famous corporate bankruptcies occurred, all as a result of the financial accounting scandal.

Bernstein mirrored the comments of Wall Street competitor Citibank in a report last week, pointing out that blockchain Technology Exchange (DEX) was favored again, especially after the failure of FTX.

The report adds that the failure of FTX will be a metal catalyst that drives regulators to speed up regulation.

Read more: Morgan Stanley shows that there is still a lot of leverage in the data encryption ecosystem