An “entirely avoidable tragedy”An “entirely avoidable tragedy”Giphy GIFGiphy GIF

An “entirely avoidable tragedy”

Crypto VC David Pakman on FTX
His timing was either very good or very bad, depending on your view of the market.
Indeed, in part because CoinFund was an early investor in the collapsing cryptocurrency exchange FTX, we asked Pakman to jump on the phone with us today to talk about this ...
...very wild week, one that began with high-flying FTX on the ropes, and which ended with bankruptcy filings and the resignation of FTX founder, Sam Bankman-Fried, as CEO.
I think it’s absolutely terrible on a bunch of levels. First, it was an entirely avoidable tragedy. This failure of the company was brought on by a bunch of flawed human decision-making, not by a failing business.
There’s also the reputational harm to the entire crypto industry, which already suffers from questions like, ‘Isn’t this a scammy place with scammy people?’ This sort of Enron-esque ...
...meltdown of one of the most highly valued and arguably most successful companies in the space is just really bad, and it will take a long time to dig out of it.
Everything we know about the tech behind crypto continues to work brilliantly.
But apparently FTX and [the trading desk also owned and run by Sam Bankman-Fried] Alameda Research had a relationship that ...
...maybe was not known to all shareholders, employees, or customers. So just the act of borrowing against it was ill-advised.
But it’s not like they could quickly sell out of those if they needed to return the proceeds of their borrowing. They ...
...were also apparently using customer funds and loaning that out or maybe even loaning it to their trading arm.
I think late-stage capital will freeze up for a little bit here. And one of the brightest star comps that just about everyone in crypto pointed to was FTX.