The sharp and rapid collapse of the FTX cryptocurrency exchange sent shockwaves through the cryptocurrency space.
The collapse of the $32 billion company in February in a matter of days cast doubt on the entire fledgling blockchain-based financial services industry.
Confidence in the industry is at an all-time low. While retail investors fled, institutional investors affiliated with FTX and its sister company Alameda Research are still figuring their losses as they were exposed to the Sam Bankman-Fried empire.
While there are lessons to be learned from this disaster that threatens the entire sector, it would be wrong to suggest that it will take a long time to restore lost confidence.
“Too many mistakes”
Billionaire Mark Cuban has not lost his faith. He continues to believe in the industry and insists there is still plenty of value in the sector despite FTX’s fall. He believes that cryptocurrency has its place and you just need to look at the big picture.
“Separate the signal from the noise,” Cuban told TMZ. “A lot of people have made a lot of mistakes, but that doesn’t change the core value.”
Cuban said he doesn’t foresee the currency going into the tank as long as consumers have valid options in the crypto world.
The Dallas Mavericks owner is currently the subject of a class-action lawsuit over the bankruptcy of Voyager Digital, the cryptocurrency lender he promoted in a partnership signed in October 2021. This partnership between Voyager Digital and the Dallas Mavericks had one mission: to promote cryptocurrencies by making coins more accessible through education and digital applications.
“Cuban and Ehrlich, as will be explained, went to great lengths to use their experience as investors to deceive millions of Americans into investing in the fraudulent Voyager platform and purchasing Voyager earn program accounts (“EPAs”), which are unregistered securities,” – the class action suit also cited Stephen Ehrlich, Voyager’s CEO, as saying.
“As a result, more than 3.5 million Americans lost more than $5 billion in cryptocurrency assets.”
Voyager filed for bankruptcy on May 9 as collateral damage from the credit crunch caused by the sudden collapse of its sister cryptocurrency Luna and UST. Millions of customers lost their savings. Voyager Digital’s assets were acquired by FTX as part of the mortgage lender’s liquidation process.
“The main question. Why am I investing in cryptocurrency?” Cuban wrote on Twitter on November 13. “Because I believe that smart contracts will have a significant impact in creating valuable applications. I have said from day 1 that the value of a token comes from the applications that run on its platform and their utilities. create.”
A smart contract is a piece of computer code that defines the terms of a transaction (loans, trades, etc.) and does not rely on any third party.
“What hasn’t been created is a ubiquitous app. An app that everyone clearly needs and is willing to go through the learning curve to use. Maybe it will never come. I hope and I think it will,” Cuban continued.
The billionaire further compared the cryptocurrency industry to the streaming industry, stating that bad ideas will perish and good ones will prevail.
“The best analogy I can use is the early days of streaming. It was crazy what people had to do to stream 16k music. Internet subscription for your dial up modem. Download ISP client. Download tcp/ip. Client. Download streaming client,” he said. “Click on the batch file on the website. Make sure they all work together. They’re laughing at all this just because you don’t turn on your radio or TV.”
He concluded on a note of optimism.
“But it was worth it in the office or outside the market. It started as a niche in 1995. Now understand that Smart Contracts are about 5 years old.”
Cuba is involved in several cryptocurrency projects, including the highly curated Bored Ape Yacht Club, which represents a collection of over 10,000 online images of monkeys posing in funny poses. Boring monkeys are the most expensive non-fungible tokens (NFT).
He is what many call an Ethereum maximalist in the crypto space, meaning he strongly believes in the potential of the second largest cryptocurrency ecosystem after Bitcoin. Ethereum is considered the internet of crypto industry, aiming to disrupt traditional financial services.