Although Buterin recommends using DeFi and self-custody to guard against centralization, he warns about possible errors in the smart contract code. The programmer considers that the approach to distinguishing between using blockchain and cryptocurrencies adopted by Singapore is bizarre.
Vitalik Buterin, the co-founder of Ethereum, recently expressed his opinion about the collapse of FTX and its former CEO, Sam Bankman-Fried. After referring to the situation as a tragedy, he said many Ethereum community members view the centralization of the exchange as suspicious.
The Russian-Canadian programmer commented that blockchain-based and decentralized finance (DeFi) protocols work flawlessly. He highlighted that it is essential to trust open and transparent sources over individual humans.
Buterin recommended using DeFi and self-custody, reiterating that anything centralized is negative by default. However, he also advised investors to guard against possible errors in the smart contract code.
Additionally, he warned that it would be wrong to downgrade everything Bankman-Fried believed. He considers it necessary to know what contributed to the fraud to prevent similar situations from happening.
He also mentioned the case of TerraUSD (UST) and Terra (LUNA) cryptocurrency, now called Terra Luna Classic (LUNC). Although he pointed out the Terra (Luna) crash was necessary for the ecosystem, he would have liked it to be ten times smaller.
The co-founder of Ethereum also warned against the approach to cryptocurrency regulation adopted by Singapore. He stated that struggling to distinguish between using blockchain and cryptocurrencies is a bizarre idea.
Neel Kashkari Comments on Crypto Assets and the FTX Collapse
Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, recently expressed his views on the FTX collapse.
He said it was not the case of a fraudulent company in a serious industry, referring to crypto assets as nonsense. He argued that they do not allow paying, as they have no inflation hedge, shortage, or tax authority.
Since Kashkari dislikes Bitcoin and other cryptocurrencies, he has called them a giant garbage dump. Last year, he said they were 95% fraud, hype, noise, and confusion, alleging they only serve to finance illicit activities.
After the collapse of FTX, several US Fed officials called for tighter regulation on crypto assets. Lael Brainard, the vice-chairwoman of the Federal Reserve, considers it crucial to supervise cryptocurrencies. She said it is worrying to see how seriously those losses affect retail investors.
Michael Barr, the vice chairman for supervision of the Federal Reserve, said they are concerned about unknown risks in the non-banking sector. In that regard, he said the crypto activity could pose risks that affect the financial system they control.
Meanwhile, some people have pointed out that the collapse of FTX is not specific to cryptocurrencies. For example, the bankruptcy case has drawn comparisons with the Enron fraud and the Bernie Madoff Ponzi scheme.
Finally, Mark Cuban, the owner of the Dallas Mavericks NBA team, explained that those failures are not exclusive to the crypto space. He mentioned bank collapses, where runs on depositors follow lending to the wrong entity, wrong collateral valuations, and arrogant arbitrages.
By Alexander Salazar