It is clearly an understatement to say that the world was not prepared for COVID-19. Governments were not equipped to handle the fact that it was a highly infectious and fatal disease that quickly became global. On top of travel bans, going outside the home was heavily restricted.
The time people had no choice but to stay at home and the years that many professionals lost their jobs became the break that cryptocurrencies needed in order to grow into a full-fledged industry. For the desperate, crypto trading became a lifesaver—a new way to profit by just using a bit of capital and the Internet. For the bored, it became an exciting and easy way to earn additional spending money.
In the span of a year, the price of BTC soared by a whopping 640%, with a unit price of $7,300 before the pandemic to over $46,800 in 2021. This spurred the creation of more crypto brands. According to Statista, there were 2,817 different cryptos in circulation in November 2019. In just two years in November 2021, this number nearly tripled to 7,557. Today, there are nearly 23,000 cryptos in the global market worth more than $1.1 trillion.
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Then came its sudden fall. With this kind of rapid growth within a market, it is not surprising that many are taking advantage of people who are eager to earn money with malicious intent. Cryptos and exchanges were created without real value backing them up, and as their fraudulent activities came to light, many global firms collapsed.
2023 saw a staggering $1.4 trillion loss in market value after big names in the crypto industry filed for bankruptcies. The FTX fiasco ended the year with an estimated $2 billion worth of loss in user funds. Celebrities and organizations who endorsed the exchange, which was one of the largest in the world, were also sued by users, together with its Founder and CEO Sam Bankman-Fried (SBF).
What happened drew further attention to the largely unregulated crypto industry. Policymakers and authorities have since called for tighter crypto regulation in order to prevent people like SBF, who is accused of defrauding more than a million of its users and investors through the use of grandiose propaganda.
American actor and crypto critic Ben McKenzie, who has an undergraduate economic degree and is the author of the book “Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud,” attended the recently concluded London Blockchain Conference as a panelist. McKenzie was also interviewed at the event, where he discussed what he believes happened with FTX and how regulation can help the crypto industry.
“When they were calling these things currencies, they weren’t working like currencies. So, I think celebrities were sort of the last gasp of this last round of ‘get as many people into the crypto casino as possible.’ Now that that stuff has gone away, all of a sudden, celebrities are no longer hawking for it. I think you’ll see a natural cleansing process,” McKenzie said in a separate interview with Bitcoin historian Kurt Wuckert Jr. at the London Blockchain Conference.
Some of the celebrities who endorsed FTX include NFL quarterback Tom Brady and his supermodel wife Gisele Bündchen, comedian Larry David, NBA superstar Stephen Curry, and top tennis player Naomi Osaka. All have been sued in class action lawsuits filed by FTX users and investors.
Just with the case of FTX alone, most will agree with McKenzie when he likened the crypto world to the “Wild West” full of “buffoonery.” He further asserted that almost—if not all—of the people who have invested in crypto have lost money. And while the United States has always supported new technology, a strict yet pro-innovation regulatory environment has to be established in order to weed out the bad actors within the crypto space.
“The United States has always prided itself on being on the forefront of whatever the next iteration of capitalism is. And that’s generally a good thing, but the downside is when people use that to take advantage of others,” McKenzie pointed out.
On the topic of self-regulation, McKenzie stood firm in his belief that there is no such thing. As a father of three children aged nine and below, the Gotham actor said that whenever he tried self-regulation, his house ended up with colorful walls and stained couches. This is much like what happened to SBF, who did whatever he wanted with FTX just because he could.
“At the end of the day, I’m an American, I want the American consumer to be protected. And I think it’s crucially important that America gets this right because we are the global leader when it comes to capitalism’s legal frameworks,” the actor concluded.
Despite the negative effects of the Russia-Ukraine war on the global economy, crypto revenue has nearly doubled in April 2023, from $18.52 billion in 2022 to $37.87 billion at present. This figure is expected to continue growing until it reaches $64.87 billion in 2027.
With the industry’s revenue growth rate, it is all the more pressing for a solid regulatory environment to be created. Balanced regulation that will protect consumers yet foster innovation is the answer. Hopefully, it comes sooner rather than later, because the buffoonery needs to be driven out of the Wild West.
