Mike Novogratz warns against ‘seeing black swans everywhere’ following FTX crash

With the cryptocurrency industry still feeling the consequences of the collapse of FTX, once one of the largest crypto trading platforms in the world, the CEO of crypto investment firm Galaxy Digital, Mike Novogratz, has warned about the dangers of seeing criminals everywhere in the sector.

Indeed, Novogratz believes that one crypto platform’s collapse doesn’t mean that the entire sector is filled with ‘black swans’ and criminals, as he told CNBC’s Squawk Box host Joe Kernen in an interview published on December 15.

Specifically, he commented on the recent sell-off, stating that Bitcoin (BTC) remains a volatile asset but also that, despite the FTX crashing:

“It’s really dangerous to think if you have one black swan, you’re going to see them everywhere like you’re going to have criminal organizations all over the place and these places run by sociopaths. It’s just not the case.”

‘Black swan’ events

With ‘black swan,’ Novogratz was referring to the common financial vernacular used to describe an anomalous and unexpected event with disproportionate consequences on future developments, often rationalized as predictable in hindsight after the event had already transpired.

The term was further popularized thanks to the investment book authored by a known crypto critic Nassim Nicolas Taleb, called “The Black Swan: The Impact of the Highly Improbable,” in which Taleb discusses epistemology, probability, risk, and psychological biases involved in investing.

That said, Novogratz further clarified that this also doesn’t mean that “every other exchange is playing by every single rule. A lot of exchanges are under some assault by the regulators for KYC/AML violations.”

However, as he concluded:

“I don’t think under every rock there’s a guy trying to steal your money.”

Meanwhile, the CEO of stablecoin issuer Circle, Jeremy Allaire, has asserted that, when looking for a safe place to hold their cryptocurrencies, “people want to see regulated firms that have major global accounting firms providing public company levels of audit,” in an interview with CNBC’s Andrew Ross Sorkin published on December 14.

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