Crypto exchange Kraken‘s founder and chairman Jessee Powell shared his anguish regarding the FTX collapse on his Twitter account and said that it is time the crypto community should stop being too trusting and raised its standards.
Powell’s 14-Tweet-long thread calls out to the whole of the crypto community, including investors, venture capitals, and regulators, and warns them to recognize red flags and push such people out of the industry before it’s too late.
Trust should be replaced with verification
Powell’s major focus was on the good, trusting nature of the crypto community. As per the nature of crypto and blockchain, people who are involved in the area carry a desire to be genuinely helpful and innovate for the better.
2/ Our good, trusting nature makes us easy targets for con artists. Some even tell us straight up that they’re here for profits, not crypto, and we praise them for their honesty.
Yet we’re surprised when they turn out to be who they said they are. We need to raise our standards.
— Jesse Powell (@jespow) November 10, 2022
Powell also said that it made the community vulnerable to con artists, even ones who make their financial greed visible from the beginning. These people, as Powell described, don’t hesitate to “sell us out for their own interests” while “we let clowns ride under our banner.”
Referring to the Terra-LUNA crash in May, Powell said that the last few months have been brutal for the crypto sphere. The implosion of a crypto exchange is like a gift to all Bitcoin haters, and it will fuel their claims against crypto. Powell said that recovering the sentiment around crypto will take years.
Venture Capitals are to blame too
Next, Powell snapped at Venture Capital firms and said that they failed at their “duty to be critical and withhold undue praise.”
8/ I know for a fact that VCs wrote checks blindly. Why? Because revenues were strong. Were they sustainable? Were they bleeding out money the other side? Was it all predicated on an untenable self-dealing setup, frontrunning clients, misappropriation of user funds? Never asked.
— Jesse Powell (@jespow) November 10, 2022
Powell listed nine red flags about FTX that should have been noticed by the venture capital firms.
FTX acting like it understood everything after showing up to the battle eight years late, spending nine figures on “ego” purchases like buying political influence, making sports deals, and FTT are among these red flags.
Lawmakers take their fair share
Finally, Powell drew attention to the U.S. lawmakers to say that they had some accountability in the FTX crash as well.
He said that they refused to provide a “workable regime under which these services could be offered in a supervised manner.”
According to Powell, this pushed businesses like FTX to off-shore lands which brought things to what they are today.
Powell said that lawmakers should focus on off-shore exchanges, instead of “wrongfully focusing on convenient, on-shore good actors”, as they do currently.
Kraken remains safe
Powell finished his words by assuring the community that Kraken wasn’t exposed to FTX or FTT. He said that Kraken prioritized survival above profit and shared his best wishes to the ones who are affected by the recent turn of events.
He said:
“Thankfully, @krakenfx wasn’t exposed to any of the resent disasters. While we aim to give our clients access to bleeding-edge crypto products, we take a very conservative approach to our business operations, security and financial resiliency. Survival & mission above profit.”
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