If 2022 is the 2008 of crypto, how many years has it set back the cryptocurrency industry?
The FTX collapse was bad, but how bad? Almost from the moment that the Bahamas-based exchange suspended cryptocurrency withdrawals in early November — and three days before it filed for bankruptcy — the historic comparisons started flying.on Nov. 8 that FTX was “Lehman’s moment,” referencing the 2008 collapse of investment bank Lehman Brothers, which sparked a global financial panic. This analogy stuck, at least over the past four weeks.
It isn’t entirely clear, either, what is even meant by a “Lehman moment.” Does it refer to a sudden and unexpected financial collapse? Or does it mean a bankruptcy that sets off a domino effect — until an entire industry sector or even the global economy is shaken? Still, “spillover” to the real economy may not be what is meant by “Lehman moment” as currently used, Elvira Sojli, associate professor of finance at the University of New South Wales, told Cointelegraph:
“Enron was doing something plainly against the rules — laws and regulation — and Lehman Brothers was doing things according to laws and regulations, but the rules did not restrict wrongdoing,” said Halaburda. As for FTX, it is “an example of going against the rules that we already have, rather than rules being bad.”
The Sarbanes–Oxley Act of 2002 was passed in the U.S. to crack down on the kinds of accounting fraud that Enron and some of its contemporaries engaged in. Given that FTX’s unraveling followed the May collapse of Terra and later Celsius, it arguably “raises questions about the practices of other major players in the crypto sector,” Werbach suggested. A legislative solution could be coming.
As for the crypto sector post-FTX, “There will be consolidation and a lot of self regulation as well as some push for external regulation to these markets,” predicted Sojli.Why do we draw these historic likenesses — are they even useful?
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