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What Bitcoin Did with Peter McCormack

Nov 21, 2022

Jesse Powell is the co-founder and Chairman of Kraken. In this interview, we discuss the rising anger over the FTX collapse, parallels with Mt. Gox, FTX’s exploitation of regulatory arbitrage, odd mainstream media reactions, proof of reserves and the future of custodial services.

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FTX has caused untold damage. There could be over 1 million creditors, from large institutions to small retail investors. There are going to be numerous heartbreaking stories of people getting rekt. But, the most significant damage caused by this criminality could be ahead of us. There is a significant risk that a misreading of the causes of this crisis will lead to regulatory damage removing access to Satoshi’s innovation for future generations.

There are many within the industry who were deeply sceptical of FTX and Sam-Bankman-Fried well before the event of the past few weeks played out. The pace of growth, the scale of revenue, and the huge expenditure. To those in the know, none of it made sense unless FTX was involved in nefarious activities. And yet, SBF was rubbing shoulders with DC politicians whilst shaping the laws to be applied to the industry.

In short order, the whole facade has come crumbling down. Stories of drug taking, polyamory, and excess within the criminal empire have emerged, confessions have been made that the effective altruism promotion was a sham, and then SBF engaged in a bizarre media campaign via Twitter. FTX’s new CEO brought in to organise its bankruptcy process stated in his 40 years of restructuring companies (including Enron) he’s never seen anything as bad as this.

So, in the face of this obvious narcissistic and incompetent criminality, why have there been a number of puff pieces in the media? Why did DC take the warnings that were made seriously? And how is it justified for politicians to threaten a sweeping global legal framework for Bitcoin and crypto? Strange things are happening, and forces are being aligned against all of us. And yet, we know the community is resilient. This could take years to play out.