Wall Street Expert Anticipates Impending Cryptocurrency Turmoil

A prominent short seller from Wall Street cautions that the cryptocurrency sector may be on the verge of repeating the blunders that precipitated the downfall of FTX.

In 2022, the cryptocurrency market was thrown into turmoil following the bankruptcy of one of the foremost exchanges, FTX.

The collapse saw numerous investors losing an accumulated total of £7 billion when it was discovered that the company’s chief, Sam Bankman-Fried, had illegally transferred client funds into his own venture. The scandal that ensued turned out to be one of the largest financial frauds in U.S. history, leading to Bankman-Fried’s conviction in the past year.

Marc Cohodes, an ex-hedge fund manager, suggests a more significant catastrophe may be on the horizon as consumer safeguards continue to be overlooked by regulators.

“It seems like no lessons have been learned. The situation is escalating,” he expressed to the Mail.

“Bitcoin’s value is skyrocketing. There’s been no significant overhaul in the rules and regulations.” His remarks were made following the decision by U.S. regulators to sanction exchange-traded funds (ETFs), which are expected to broaden the reach of crypto trading activities.

Bitcoin’s value has witnessed an approximate increase of 50 percent in six months, currently trading at around $42,900.

Moreover, Cohodes points out the general unwillingness in Europe and the U.S. to delve into Bankman-Fried’s creation of the now insolvent crypto exchange, FTX, and avert a repeat incident. “The inquiry into FTX’s founding is seemingly avoided by all.”

“The capital flowing in the cryptocurrency market and its exchanges is extensive and murky. Such financial power tends to make stakeholders turn a blind eye,” he stated.