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A Ripple executive says there is one important lesson from the meltdown of crypto exchange FTX that he \u201ccan say with total confidence will not be learned.\u201d The executive added: \u201cRegulation that punishes after the fact won\u2019t catch it. Investor due diligence won\u2019t either.\u201d<\/strong><\/p>\n The CTO of Ripple Labs, David Schwartz, shared his thoughts on the collapse of cryptocurrency exchange FTX in a series of tweets Monday. FTX filed for Chapter 11 bankruptcy<\/a> on Nov. 11.<\/p>\n While noting that several lessons should be learned from the FTX fiasco, the Ripple executive said:<\/p>\n There\u2019s one important lesson that is really pretty obvious in retrospect and that I can say with total confidence will not be learned.<\/p>\n<\/blockquote>\n He explained: \u201cIf you hold billions of dollars of other people\u2019s money for indefinite time periods, the temptation to speculate with those funds is irresistible if there aren\u2019t verifiable checks that make such risk-taking virtually impossible, nothing else will be sufficient.\u201d<\/p>\n Schwartz emphasized:<\/p>\n Regulation that punishes after the fact won\u2019t catch it. Investor due diligence won\u2019t either. Of course, many people will say that it could be, and likely is, happening, but they\u2019ll be shouted down by accusations of sowing FUD or upsetting a system that is making people money.<\/p>\n<\/blockquote>\n \u201cThis kind of thing will always happen unless it cannot happen,\u201d he stressed. \u201cThe temptation is irresistible. That is one of the most important lessons of FTX. But most people will actively choose not to learn this lesson because of, among other things, the elephant in the room.\u201d<\/p>\n FTX is currently being investigated by a number of authorities worldwide. In the U.S., the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) are investigating<\/a> the exchange for allegedly mishandling customer funds, among other charges. Turkey<\/a>\u2018s financial intelligence unit has also launched an investigation into FTX and the Bahamas<\/a> securities regulator has been trying to seize FTX\u2019s cryptocurrencies.<\/p>\n Ripple Labs is currently engaged in a lengthy lawsuit with the SEC. The securities regulator sued the company, its CEO Brad Garlinghouse, and co-founder Chris Larsen over the sale of XRP<\/a>, claiming that the crypto token is a security. Garlinghouse expects an answer in the first half of 2023<\/a>. The Ripple CEO recently said that the crypto industry will be stronger<\/a> after the FTX fiasco if we keep focusing on transparency and trust.<\/p>\nOne Lesson From FTX Collapse That Won\u2019t Be Learned<\/h2>\n
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