Cardano (ADA) founder Charles Hoskinson has reacted to the collapse of the FTX cryptocurrency exchange, suggesting that the incident might be among the last crises to hit the digital assets space.
According to Hoskinson, incidents similar to the FTX situation are getting complex, considering that they have ripple effects on other ecosystem players, but he noted that the cycle might be coming to an end, he said during a webcast on November 9.
Hoskinson added that the implication of FTX collapse would likely mirror market events that followed the Terra (LUNA) ecosystem crash that resulted in cascading effects on companies like Celsius Network and Three Arrows Capital.
“I think this might be the bottom, one of the last ones to deal with. It’s going to be hard to predict how bad it will be, and it could certainly potentially be very bad. There are not many more firms that were like FTX or Alameda or like, Three Arrows Capital, and so forth. At least in this cycle, I truly do hope that this is the last cycle of this nature,” said Hoskinson.
Impact of 2021 excesses
Although details behind FTX’s insolvency remain scanty, Hoskinson stated that the collapse is an impact of the general crypto markets ‘excesses’ of 2021.
“It’s just an example of the excesses that I repeatedly warned people about in 2021 and all throughout this year, in part prior points in my career, like in 2017, with ICO mania. You don’t get something for nothing in extremely high yield; it tends to evaporate very quickly,” he said.
Furthermore, Hoskinson suggested that the proposed purchase of FTX by Binance is not a silver bullet, noting that much work is needed. At the same time, he acknowledged following the drama, the high-profile event will likely attract new scrutiny and a regulatory push.
“Situations like this, as I mentioned, do tend to invite litigation. They tend to invite regulation, and they tend to invite enormous scrutiny. <…> The purchase of FTX by Binance is no silver bullet. There are still many things that have to happen in order for this to be completely clear for the market,” he added.
Notably, the collapse of FTX has resulted in sharp market volatility, with a Finbold report indicating that the sector wiped out over $100 billion in 24 hours, with assets like Bitcoin (BTC) correcting below $20,000.
In this line, Hoskinson suggested that if the Binance acquisition of FTX goes through, the market might stabilize again.
In general, Hoskinson pointed out that the crash is negative for the cryptocurrency market, noting that investors and regulators will not isolate the incident for FTX alone but for the general digital asset space.
However, he expressed optimism that the market will likely recover, considering the underlying technology and projects in development.
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