Uniswap is a protocol created in 2018 to create liquidity and exchange ERC-20 tokens on Ethereum. It is one of the first two decentralized exchanges worldwide.
Hayden Adams, founder of Uniswap, one of the world’s largest decentralized exchanges (DEX), thinks the jury was right in finding Sam Bankman-fried, aka SBF, the disgraced founder of FTX, a now-defunct exchange, guilty of the seven charges presented by the prosecution.
SBF’s Guilty Verdict is Correct, but It’s Not Time to Celebrate
Uniswap’s founder explained that FTX’s bankruptcy not only caused users to lose billions, but the industry suffered a huge blow to its reputation. In Adams’ view, the few winners in this case are the lawyers involved and the various cryptocurrency opponents that the founder did not mention.
The collapse of FTX in November 2022 marked a dark history in cryptocurrencies. At the end of what was already a challenging year for leading assets like Bitcoin (BTC) and Ethereum (ETH), the FTX crash took the community almost by surprise.
Days before the then-popular exchange filed for bankruptcy, Alameda Research and Caroline Ellison, a top executive associated with FTX, said they were willing to buy back FTT, the crypto token issued by FTX.
The United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) filed charges against FTX and Sam Bankman weeks after they filed for bankruptcy. The Justice Department charged Bankman-Fried with several charges, including conspiracy to commit wire fraud and money laundering.
The SEC said Bankman-Fried orchestrated a scheme to defraud investors and customers. Of note, the regulator said Bankman-Fried misled investors about the health of FTX and its trading wing, Alameda Research. The former FTX boss pleaded not guilty to all charges.
FTX Collapse Is a Lesson for Cryptocurrencies
After a four-week trial that began in early October, Sam Bankman-Fried was found guilty of seven criminal charges. However, the official sentencing will be in March 2024. The former FTX founder could face a maximum possible sentence of 115 years in prison.
Following this verdict, Adams said, learning from the FTX collapse, the industry should focus on the technology and values of the sphere, primarily around building decentralized systems that are open, auditable but secure.
To stay safe, the Uniswap founder said cryptocurrency users should easily pick out “cult of personality sociopaths,” which allowed Sam Bankman-Fried to prosper before being caught after the FTX crash.
The FTX crash, a sudden collapse of one of the major peers in the cryptocurrency market, underscored the volatility and risks inherent in the world of cryptocurrencies. This disaster had a significant impact, but brought valuable lessons to the market. From the critical importance of strong liquidity management to increased awareness of regulatory issues, these lessons are shaping the future of cryptocurrency exchanges.
Following the FTX collapse, it is vital that exchanges prioritize continually evaluating and correcting potential weaknesses and bottlenecks. The FTX incident highlighted that stress testing is not just a good practice, but a necessity. Without proper stress testing, exchanges may not fully understand how their systems will respond in the event of duress. These unforeseen vulnerabilities can cause problems during market turbulence, including downtime, order execution failures, and massive losses for traders.
In the wake of the FTX crash, exchanges should prioritize regularly and rigorously evaluating their systems to identify and address any potential weaknesses or bottlenecks.
By Audy Castaneda
