Don’t Entrust Your Funds to Narcissistic Billionaires

Don’t Entrust Your Funds to Narcissistic Billionaires

Marketing Insights|News

Those of you who don’t cultivate a rich life underneath a rock will have heard that FTX, led by Sam Bankman-Fried (or SBF), has spectacularly and very publicly collapsed.

Now is not the time for I-told-you-so drivel. However, it is fair to say people have been warned for years about the dangers of holding cryptocurrencies on a centralized platform, even an exchange which appeared too big to fail.

The world’s second largest crypto exchange just blew up and barely anyone saw it coming, perhaps except for CZ of Binance who unwittingly (he claims) triggered the ‘run on the bank’ style mass withdrawal of funds from FTX.

Self custody is the single best way to ensure crypto holdings can weather volatility in the space.

Convenience Over Security

Retail investors like exchanges. The colorful interface gives them a warm fuzzy glow inside, and at the click of a few buttons they can exit or enter positions.

God forbid they would need to embark on the laborious process of moving funds from their own hardware wallet to an exchange to make trades, then be forced to transfer back to the wallet afterwards.

Yes. That is sarcasm. We should realize by now that no funds are safe on a centralized platform after the multiple collapses in the space, in fact hodlers should be hyper focused on the FTX fiasco because it proves we don’t always know what’s going on behind closed doors.

Is Binance safe? Probably. But we really don’t know. The very simple measure of using ideally cold storage on a hardware wallet disconnected from the internet neatly solves the whole issue.

Because Greed Rules

The overriding conclusion from the FTX fiasco is that greed and arrogance led SBF to misallocate user funds and massively overleverage on native coin FTT. He even said it himself in an interview earlier this year: crypto yields can be squeezed from a metaphorical black box that “does literally nothing.”

Now we have the information that SBF squeezed a little (a lot) harder than he should have, this looks very, very bad.

SBF was a genius, until he was not. His proclivity for making money was lauded by Silicon Valley and VCs, until it was not. A small cadre of friends lived the life in a Bahamas penthouse making lots of money, until they realized too late that FTX and its various arms were nothing more than a speculative house of cards.

If you learn one thing from this disaster, it should be to keep your funds safu inside a cold storage hardware wallet. SBF cared more about his balance sheet than users’ money. If crypto holders don’t take this as a cautionary tale, then we may just see more of the same in future.

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