‘The damage here is huge’

The crypto industry needs to raise its standards in the wake of the implosion of Sam Bankman-Fried’s cryptocurrency exchange FTX.

That’s according to fellow exchange Kraken’s CEO and co-founder Jesse Powell, who hit out at “clowns” in the industry who sell out their customers.

“Our good, trusting nature makes us easy targets for con artists. Some even tell us straight up that they’re here for profits, not crypto, and we praise them for their honesty. Yet we’re surprised when they turn out to be who they said they are. We need to raise our standards,” he said in a tweet thread.

Kraken is one of several companies with exposure to FTX. It holds about 9,000 FTT, the native token of FTX. Amber Group, Crypto.com, Galaxy Digital, Multicoin Capital, Selling Capital, Sequoia Capital and Wintermute have also released statements detailing their exposure to the company.

Powell, who is due to step down as Kraken’s CEO early next year, and the company itself have both emphasized that the firm is not “affected materially” by recent FTX news, but Powell said that for the sector at large, “the damage here is huge.”

FTX ran into trouble at the start of this month following reports that Sam Bankman-Fried’s trading firm held significant amounts of FTT, raising concerns about the relationship between the two companies.

A few days later, crypto exchange Binance said it would liquidate its FTT holdings. Binance then signed a non-binding letter of intent to buy the rival exchange. Yesterday, after seeing FTX’s financials, it backed out of the deal.

“An exchange implosion of this magnitude is a gift to bitcoin haters all over the world. It’s the excuse they were waiting for to justify whatever attack they’ve been keeping in their back pocket,” Powell said.

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