Ripple CTO David Schwartz has taken to Twitter to share some vital lessons he drew from the FTX crisis. According to Schwartz, the collapse of the exchange still has a crucial lesson: temptation is always irresistible. However, he noted that many people will still fail to learn this truth from recent events.
He explained that there could be a temptation for anyone holding people’s funds to speculate with the funds. For him, such temptations could be irresistible if the holding has been for a long time. Schwartz noted that once there are no appropriate checks for verifications, the controls will have lapses.
“If you hold billions of dollars of other people’s money for indefinite periods, the temptation to speculate with those funds is irresistable if there aren’t verifiable checks that make such risk-taking virtually impossible; nothing else will be sufficient.”
He further said:
“Regulation that punishes after the fact won’t catch it. Investor due diligence won’t either. Of course, many people will say it could be, and likely is, happening, but they’ll be shouted down by accusations of sowing FUD or upsetting a system making people money.”
The Ripple CTO also stated that some expert investor groups had access to private information about the defunct exchange. They did not, however, understand the full scope of its repercussions. Instead, they made massive investments worth hundreds of millions of dollars in FTX. The trend of their actions focused on the profits from their investments.
The fall of FTX has been met with many reactions from stakeholders and other parties. David Schwartz has also joined the list with this Twitter thread.
David Schwartz not exactly a fan Of SBF
Sequel to FTX collapse, Ripple CTO slammed FTX’s co-founder and former CEO Sam Bankman-Fried (SBF). He said that SBF is a terrible trader due to carelessness in some of his actions. In the tweet aimed at taking a dig at SBF, Schwartz mentioned that your skill is your ability to track and understand your risk tolerance in the market.
After the crash, he announced that FTX employees who were clean of the FTX saga could consider applying for a position at Ripple, saying the blockchain payments business is constantly recruiting. In the announcement, he highlighted a few exclusions, saying that Ripple wanted nothing to do with the compliance, finance, or business ethics team at FTX.