Let’s Talk…The Collapse of FTX?

So last week one of the largest crypto currency exchanges collapsed in a dramatic fashion. It seems that the founder and ten of his friends were using other people’s money to fund their lavish lifestyle in the Bahamas (in simple terms it was a sophisticated Ponzi scheme). It also seems that some very high profile celebrities had vast amounts of their net worth invested as shareholders in FTX. 

Here are my thoughts.

• First, this showed the world the need for regulation of this industry. Many of these “exchanges” are not in the USA & that is for a reason. They don’t want the scrutiny of regulators.
• Second, be careful where you put your money, and be aware that if it seems too good to be true it probably is.
• Third, as this shows, diversification is very important. Don’t put all your eggs in one basket.
• Lastly, be aware of celebrity/cult of personality types. If they don’t let you look at the books, it’s for a reason. In my career, I’ve seen this happen over and over. People want a shortcut to get rich quick and end up being taken for a fool by a con artist.

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. 

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Cryptocurrency and cryptocurrency-related products can be volatile, are highly speculative and involve significant risks, including: liquidity, pricing, regulatory, cybersecurity risk, and loss of principal. Cryptocurrency exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers, malware, or bankruptcy.