Last night SBF was found guilty of all 7 counts, almost exactly 1 year after the collapse of FTX. Some reflections…

2 Fast 2 Furious
One of crypto’s most important innovations is the creation of a truly global capital market (enabled and enforced by its tech). One of the byproducts that it also creates an instantaneous feedback loop for leverage. For every new $ in crypto, the speed at creating a fresh $ out of that can happen with a finger-snap. Combine that with a new industry wanting to prove itself by creating and validating new narratives — the dopamine of leverage creation leads to financial engineering. The noise-to-signal gets to a point of “2 fast 2 furious”

The Hangover
The FTX machine was a major perpetrator of this environment, but also a symptom of the larger crypto leverage story. The past 12 months has seen the dust settle and revealing the underlying dominoes (Terra Luna, 3AC, BlockFi, Celsius). I’ve seen first-hand the extent of the deleveraging and the influence that FTX was in all corners of the industry — whether you were a client that held funds on platform, a startup that wanted to strategically partner, a navigating regulator, or a marketer/news publication — whether (un)deserved or (un)intended.

Intermission
Crypto industry today is in intermission mode — reflecting on the setback, taking a bathroom break, getting refreshments… Everybody I’ve talked to is ready to move on from SBF/FTX — and we agree that this setback was necessary to wash out some sins before they had actually become ingrained as part of the industry’s DNA and “too big to fail.” Noise also isn’t inherently “bad” — it has a purpose in bringing alongside the fundamentals alongside it — but the our space has extreme bipolarism related to the signal-to-noise ratio at any given moment. Looking fwd — incumbent big companies are fine-tuning their efficiencies and defining “next frontiers,” ecosystem players are continuing to survive in a flat market, and new builders are experimenting and tinkering. This next chapter is hugely important because we have a responsibility to justify why crypto is useful and deserves to exist, but it won’t be easy (nor should it be) with newer challenges like unclear/hostile regulations.

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