This year, the cryptocurrency market’s volatility was proven through a massive crash in the spring. As the value of numerous cryptocurrencies and crypto exchanges plummeted, one figure rose up to bail out the industry through his acquisitions and fundings of these faltering enterprises.
Sam Bankman-Fried is the founder and former CEO of FTX, which had been the most stable crypto platform. His quick action to stymie the crash in the spring, as well as his work to promote common acceptance of cryptocurrency, dubbed him monikers such as “the J.P. Morgan of Crypto” and “Crypto’s savior.”
However, after FTX’s declaration of bankruptcy in early November, claims of FTX’s security and Bankman-Fried’s integrity have been seriously challenged.
As FTX’s bankruptcy initiates a second crypto crash this year, the legitimacy of cryptocurrency’s long-term backing and value is once more coming to the surface. While expert opinion suggests that cryptocurrency isn’t going anywhere, the narrative of FTX’s downfall nevertheless suggests the lingering presence of two problem points: misplaced trust in public entities and the runaway desire for “the next big thing.”
The persona of Sam Bankman-Fried
FTX’s founder covered a lot of ground in order to grow the company’s appeal in the cryptocurrency industry. From Larry David’s Super Bowl ads to meetings with political officials, Bankman-Fried emphasized the enduring presence of crypto across various societal levels.
As FTX grew, Bankman-Fried’s philanthropic endeavors expanded as well, including research into pandemic prevention and artificial intelligence. His philanthropy, coupled with the underlying decentralist philosophy of crypto (explored in The Denison Forum Podcast episode “A dive into cryptocurrency with Dr. Lee Bratcher”), established Bankman-Fried’s persona of global altruism.
Because of this persona and the backing of FTX, investors confidently poured billions into the platform despite a volatile market.
Nevertheless, the causes behind FTX’s crash were as human as any other.
The collapse of FTX
In November, it was discovered that FTX’s sister company, Alameda Research, held its assets in FTX’s own cryptocurrency, FTT, which prompted questions of legitimacy regarding its worth.
This prompted rival company Binance, another crypto-trading platform, to sell their holdings of FTT, citing “recent revelations.”
More investors followed suit, and FTX announced that Binance would be buying the company. However, when Binance pulled out of the deal, FTX declared bankruptcy in the following days.
Investigations revealed that FTX had been using customers’ money to pay off the loans of Alameda Research. When customers sought to reclaim their investments, FTX, short $8 billion, was required to freeze withdrawals.
As Bankman-Fried undergoes trial in bankruptcy proceedings, questions of blame linger. He claims that he did not know the full extent of the trading between his two companies and blamed the issue on “huge management failures.”
The ensuing court proceedings will doubtless shed light on the story, even as the question of what will happen to investors’ money remains unclear.
Keeping our trust in check
Though cryptocurrency holds altruistic potential through its privatization and resistance to inflation, the continuing story of FTX and its founder shows that the crypto market is still capable of suffering the consequences of fallen business practices such as dishonesty and mismanagement.
This should be unsurprising to Christians.
After all, Psalms 2 tells us that “the kings of the earth set themselves, and the rulers take counsel together,” but that “he who sits in the heavens laughs; the Lord holds them in derision” (vv. 2, 4). Even the noblest of plans of those in power are not to be equated with God’s own plans, for the plans of the powerful can be corrupted by sinful hearts.
For Christians, the danger comes when we allow ourselves to listen to and place our hope in the narratives built by those around us rather than to the narrative God speaks to us.
Cryptocurrency has grown in popularity not only on the basis of its altruism but also, in part, on its trendiness. Celebrities such as Tom Brady and Kim Kardashian have endorsed crypto.
Furthermore, as the world order shifts in unprecedented ways through the emergence of new technologies, cryptocurrency appears as a young, elegant way of interacting with a sleek new world. If it is, that’s okay, but we must guard our hearts against the pull of misplaced desire, which will lead us to act in ways that keep us bound to the ways of the world and not to the ways of heaven.
“The eye is the lamp of the body,” proclaims Jesus. “So, if your eye is healthy, your whole body will be full of light, but if your eye is bad, your whole body will be full of darkness” (Matthew 6:22–23). What is your eye looking toward?
Perhaps you never bought into the concept of crypto and dismissed it as a temporary fad. But are there other narratives that pull on your heart?
From things as grand as politics and technology to things as close to us as our family, we must take great pains to ensure that our faith precedes their value in our lives and not the other way around.
Though the voices of today call loudly to you, a softer one lingers still.
Will you listen to it?