Clément Inbona, Fund Manager of the French manager “La Financière de l’Echiquier” (LFDE), shared his opinion and analyzed the situation of crypto assets. He also talked about the FTX cryptocurrency trading platform.
Clement opined: “The total value of cryptocurrencies has experienced a 70% drop against the dollar. Although that is more than $800 billion, the deflation of this bubble, with its attendant share of scandals, will undoubtedly remain in all annals.”.
He further said: “The latest event to date is the bankruptcy (the so-called Chapter 11 of US law and prelude to bankruptcy) requested by the second world cryptocurrency trading platform: FTX. Since then, the scandals surrounding the company have multiplied and the collateral damage suffered by the sector has accumulated. Why such a debacle?”
“First of all, it should be remembered that the only currency that a cryptocurrency has is its name. The use of the term ‘cryptoactive’ seems more accurate. In fact, a cryptocurrency does not fulfill three of the essential functions of a currency. First of all, it is not a store of value because its often stratospheric volatility proves otherwise. Nor is it a widespread medium for exchanges: who can boast that they use them for all their daily or financial operations? Finally, it is not a unit of account: what household or what company uses it for their accounting? In addition, it is not an asset that generates income, as traditional assets in the form of dividends, coupons or rents do.Inbona declared.
He further stated: “By irony of history, the founder of the FTX platform, Samuel Bankman-Fried, is a banker only in name. His platform has been the subject of a ‘bank run’ (an avalanche of depositors who withdraw his assets) that has caused his downfall. However, it is not a bank because it is not regulated by a supervisory authority, nor subject to a tax authority worthy of the name given that the Bahamas is on the European Union’s blacklist of tax havens. Nor is it a listed company subject to transparency obligations”.
The Fund Manager concluded: “Since this event, bad news has accumulated for the players in the sector: blocking of withdrawals for some, rumors of bankruptcy for others. Not a day goes by without collateral damage. Despite everything, this fire has so far been confined to the world of crypto assets. Traditional assets seem relatively impervious to these shocks. This fact may be surprising, in view of the amounts at stake, but it seems quite logical knowing that the universe of crypto assets carries in its DNA the power to free itself from the corset of traditional finance and place itself outside of them.”.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.