We've seen the news surrounding the collapse of one of the titan exchanges of the past years, FTX. And while looking at their internal operations, its starkly clear that they really weren't playing by the book, and therefore, this news didn't come as a surprise for me. What surprised me, however, is the fact that this titan collapsing is a reminder of how undeveloped the legal landscape really is around the crypto sphere.
Not to infer from the previous statement that the legal framework and the regulatory bodies had failed FTX, but rather, how easy it is in its current form to exploit that uncertainty regarding how entrepreneurial endeavors and ventures are to be regulated by the enforcing entities. Through that uncertainty, greed, especially of the corporate kind, festers.
In the last decade, businesses and exchanges solely operating within the field of cryptocurrency have all leveraged an enormous advantage they all had in common: skirting the legal system any other company would otherwise be subject to by registering themselves as a legitimate entity on the side of the legacy system, whilst operating in the entirely uncharted territory of crypto. As I've mentioned in my previous article, the only legal entity that could navigate through that territory is the SEC. Even then, the SEC is excruciatingly slow at taking the initiative in regards to any conundrum involving crypto, owing to the fact they can't navigate without much guidance from the law.
The truth of the matter is that the XRP lawsuit is an excursion for the SEC. It's extremely illogical to think that the SEC did not forecast themselves losing (by all means) in court against XRP. It's just absurd to think they provisionally layed out the one card they have against the deck XRP has, and think "I can win this!" This is why I think the SEC puffing its chest against the big dogs is their way of exploring the capabilities of their current legal framework against cryptocurrencies, before refining it further, taking it through the turing test. Remember, the courts have never seen a cryptocurrency in place of the defendant, proving its merit and viability against what crypto essentially seeks to destroy. I recommend you keep your eyes on this case, because if XRP indeed wins against them, they aren't gonna be the only ones popping champagne bottles.
But don't pop the expensive one, as the SEC is simply getting warmed up as they chart a territory previously uncharted to them, and as time goes on, many more lawsuits are going to be filed against the cryptocurrency field.
Now, my peers on LeoFinance have all done a great job covering the unfolding situation regarding FTX's demise, but I think it's of great importance to look at the bigger picture: What enabled such a situation to even take place?
A ton of crypto users who are "in it for the tech," which make the majority, would sell you the absolutist anti-regulation that comes with the crypto rhetoric. While I do subscribe to that notion in a larger sense, part of me thinks that the SEC should take a much more aggressive approach when it comes to regulating companies and exchanges solely dabbling in crypto. Regulations don't simply restrict the priviliges of the user and their relationship with their wallet, it also largely regulates the operations under the hood, avoiding embarrassingly preventable scenarios such as overloaning in the case of Celsius. Imagine the same thing happening with your Chase bank, or your BofA savings account. How would that look like? Circuslike.
What leveraging this advantage means for those exchanges, especially FTX, is that deflecting their due consequences and repercussions has never been easier. The current lawsuits leveled against SBF, as of today, are tallied at 7. And honestly, reading their premise is laughable, and I can't imagine the judge having any other reaction other than swift dismissal. Those suits are a last-ditch effort to salvage the unsalvageable. To be fair, while SBF made all of the decisions that dissolved his exchange and massively undermined its user's funds, SBF could easily deflect those suits on the premise that those were all, technically and legally, executive decisions done under the business, and thus cannot be held accountable.
Hive does it better
This is yet another opportunity to bolster what Hive is capable of. Many of those that opt to use exchanges in the long-term usually do so because of the enticing savings apparatus they have. The tradeoff that's a deal-breaker for me is the fact that you'd have to give up custody of your coins to an exchange that is subject to the extremely turbulent legal landscape of crypto in order to reap the savings. With Hive, self-custody is possible alongside HBD savings, without having to go through that nasty tradeoff.
Conclusion
Crypto businesses and exchanges that established their presence and operations in the field of crypto are almost always off the hook when it comes to the legal side of things. This legal disparity, when compared to more traditional companies on the legacy system side, comes from the fact that there simply exists no solid legal framework to implicate those exchanges in case of endangerment of funds. While I'm strongly against any sort of governmental intervention, I'm still on the fence on whether regulation is truly the solution to keep those exchanges in check.
Posted Using LeoFinance Beta
