Regulatory measures are tightening their grip around the crypto world, with recent trials hinting towards a future that will demand transparency and ethical practices within the industry. The bar of scrutiny has been set high with the ongoing criminal trial of Sam Bankman-Fried, the founder of the popular crypto exchange, FTX.
In a courtroom scenario that could well have been out of a Hollywood screenplay, Bankman-Fried found his past catching up with him when Adam Yedidia, his old MIT roommate, and a former developer at FTX, testified about the exchange’s glaring $8-billion deficit. Yedidia hit upon a bug in the coding, which led to continued liabilities for Alameda Research, one of the key flags in Bankman-Fried’s alleged fraud case.
Seeking to add a layer of clandestine operations, Bankman-Fried had reportedly urged Yedidia to use the Signal messaging app, citing it is safer for discussions that could potentially land the company in hot water with regulators. From discussions on code problems to the personal nuances of his relationship with former Alameda Research CEO, Caroline Ellison, Bankman-Fried’s web seemed to unfurl before the courtroom.
Although the intricacies of this trial metaphorically serve as fodder for a future movie script, it also sends ripple effects across the industry. The revelations in the trial underscore a serious need for financial transparency in a world that often exists behind a veil of digital anonymity. However, while the pursuit of crime is essential, hasty regulatory measures could potentially stifle innovation, as standpoints such as bug exploitation form a part of the industry’s evident learning curve.
On the other end of the queue, investment in crypto startups has seen a downturn, as per a report by blockchain analytics firm Messari. The report claims that funding has fallen back to levels seen at the end of 2020, potentially hinting towards a bearish trend or a shift in investor interest. Despite this, the U.S. remains a substantial part of the investing body, contributing to over half the active venture capital.
While these two incidents paint a delicate balance of growth and scrutiny, they give credence to the ethos that ‘blockchain’ isn’t just a flash-in-the-pan industry. As the sector matures, it’s clear that crypto companies will be put under the microscope, not only to ensure they adhere to standard ethical practices but also to ensure they surge forward in their pursuit of innovation without leaving a trail of unattended loopholes.
Source: Cointelegraph
