• Coinbase CEO Brian Armstrong labeled FTX as a fraud due to misappropriation of customer funds.
• Armstrong condemned FTX’s suspension of customer fund withdrawals as fraudulent.
• Armstrong believes the FTX scandal is a ‘black mark’ for the crypto space, though it is not representative of the entire blockchain ecosystem.
Coinbase CEO Brian Armstrong has recently labeled the collapse of Sam Bankman-Fried’s FTX exchange as an absolute fraud. This comes after the exchange suspended customer fund withdrawals and was found to have misappropriated customer funds.
In an interview with Bloomberg on Jan. 11, Armstrong stated that it was more than just a case of bad bookkeeping or poor management of customer funds, but an absolute fraud. He said: “It seems pretty clear to me that it’s not just a run on the bank or poor management of funds. It appears that [FTX] took customers’ funds from the exchange, moved them to their hedge fund, and then ended up in a very underwater position. That was, I believe, against their terms of service and against the law. So from my point of view, it looks like a massive fraud.”
Armstrong also condemned FTX’s suspension of customer fund withdrawals, describing it as fraudulent. When asked if he thinks the FTX collapse will attract increased draconian regulatory scrutiny to the space, Armstrong stated that the FTX scandal is a bit of a ‘black mark’ for the crypto space. He believes it will serve as a wake-up call and a moment of catalysis to generate regulatory progress. He stated that Coinbase has been calling for regulation and working with policymakers for some time, and he hopes the FTX scandal will act as a reminder to do more in that regard.
In conclusion, Coinbase CEO Brian Armstrong’s labeling of FTX as a fraud due to misappropriation of customer funds has shed light on the need for increased regulation in the crypto space. Armstrong believes this scandal will act as a wake-up call and a moment of catalysis to generate regulatory progress, which is something Coinbase has been advocating for some time.