Lessons learned from FTX’s collapse mean crypto market’s future remains bright, New Huo Tech CEO says
- The industry’s rapid, often volatile evolution – which in 2021 saw it described as ‘more like the Wild West’ – has heightened calls for greater regulation
- November’s scandal over the cryptocurrency exchange FTX can have a positive effect and trigger new laws, greater transparency and investment, Du Jun suggests
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The spectacular collapse of the cryptocurrency derivatives exchange FTX, which on January 31 last year had been valued at US$32 billion, sparked shivers throughout the industry, which has dubbed this moment its “crypto winter”.
Prices of bitcoin, the most popular cryptocurrency, and others in the industry – already regarded as volatile – had experienced big falls last summer. But then last November, FTX filed for United States bankruptcy court protection. It said it owed US$3 billion to its top 50 creditors, including about US$1.45 billion to 10 of them.
The news caused a rippling effect – sending cryptocurrency prices and trading volumes plummeting again, while many nervous institutional investors walked away.
Reports suggest the collapse of FTX and its affiliates left an estimated one million investors, including market makers, facing total losses worth billions of US dollars. The fallout has damaged the liquidity of the entire market, but more importantly, traditional financial institutions have been turning their backs on cryptocurrency investments.
So what does the future hold for those cryptocurrency companies trying to pick up the pieces and carry on in the industry – including the Hong Kong-listed digital assets platform New Huo Tech? Its CEO, Du Jun, is among the insiders who believes crypto’s winter will not last long.