Is Cryptocurrency Dead? Will the FTX Fallout Kill Crypto?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 16 November 2022
⏱️ 25 minutes
🔗️ Recording | iTunes | RSS
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Summary
How the bankruptcy of FTX, the world's third-largest crypto exchange, undermines trust in cryptocurrency and decentralized finance, making it even more difficult for crypto to ever be taken seriously as a monetary alternative.
Topics covered include:
- How FTX squandered its customers' deposits
- How FTX is another example of a private money bank run
- How traditional securities lending works and why it is very low risk compared to the highly speculative nature of cryptocurrency lending platforms
- How FTX's demise is impacting numerous entities including Voyager, BlockFi, Bitcoin miners, venture capitalists, and many others
- How should individual investors store cryptocurrency, and does it even make sense to continue to own it
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Show Notes
Don't Miss Out on Crypto: Larry David FTX Commercial
The spectacular implosion of crypto’s biggest star, explained by Emily Stewart—Vox
FTX balance sheet, revealed by FT Alphaville—Financial Times
After FTX: Rebuilding Trust in Crypto’s Founding Mission by Noelle Acheson—CoinDesk
How Sam Bankman-Fried’s Crypto Empire Collapsed by David Yaffe-Bellany—The New York Times
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. |
| 0:03.0 | This is a personal financial show on Money. |
| 0:06.0 | How it works, how to invest it, and how to live without worrying about it. |
| 0:10.8 | I'm your host, David Stein, today's episode 410. |
| 0:13.7 | It's titled, Is Cryptocurrency Dead? |
| 0:17.2 | Last week, FTX, the third largest crypto exchange in the world by trading volume with a 10% |
| 0:24.0 | market share, filed for bankruptcy. |
| 0:27.2 | FTX was founded in 2019 by Sam Bankman Freed. |
| 0:32.5 | It had over a million customers in 2021. |
| 0:36.5 | This passed February during the Super Bowl, FTX ran an ad featuring Larry David, the comedian. |
| 0:43.7 | In the ad, he was highly skeptical of numerous inventions throughout time. |
| 0:48.9 | The tagline of the ad was, Don't Be Like Larry. |
| 0:52.4 | Don't miss out on crypto and FT's, the next big thing. |
| 0:56.8 | Now apparently, FTX's customers are missing out on over a billion dollars of their funds |
| 1:03.6 | that they had custodyed at FTX. |
| 1:06.9 | The money's gone, and the Security and Exchange Commission and the Justice Department are |
| 1:12.3 | investigating. |
| 1:13.3 | John J. Ray III, the new CEO of FTX because Bankman Freed resigned, said that chapter 11 |
| 1:23.2 | is, quote, appropriate to provide FTX group the opportunity to assess its situation and |
| 1:30.1 | develop a process to maximize recoveries for stakeholders. |
| 1:35.0 | In an interview with New York Times journalist David Yaffe Bellany, Bankman Freed said that |
| 1:42.1 | his affiliated trading firm, Alameda Research, had a large margin position on FTX, which means |
... |
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