Investment firm Paradigm is still optimistic about the potential of crypto after the collapse of FTX. “FTX’s explosion has caused some to question the value of crypto. But FTX’s problems are precisely those that have decentralized finance [defi] can solve through increased transparency and security,” the company’s co-founder emphasized.
Paradigm on FTX Collapse, Defi
Paradigm co-founder Matt Huang took to Twitter to explain the impact of the collapse of cryptocurrency exchange FTX on his business. Paradigm is a San Francisco-based investment firm focused on supporting crypto and Web3 businesses and protocols.
“We are shocked by the revelations about FTX, Alameda and SBF,” he began. FTX and trading company Alameda Research have filed for Chapter 11 bankruptcy Last week. Both companies were founded by Sam Bankman-Fried (SBF), who resigned as CEO of FTX.
“The facts continue to come out and there will be many lessons to be learned,” Huang added, adding:
We deeply regret investing in a founder and company that ultimately did not align with crypto values and caused enormous damage to the ecosystem.
“Paradigm’s equity investment in FTX was a small portion of our total assets and has now been reduced to $0,” the co-founder detailed.
“We never traded on FTX and had no assets on the exchange. We never invested in related tokens such as FTT, SRM, MAPS or OXY,” he clarified.
Huang was previously a partner at venture capital firm Sequoia Capital, which also recently flagged its FTX investments up to $0. The venture capital firm noted that “a liquidity crunch has created solvency risk for FTX.”
The Paradigm executive pointed out:
The explosion of FTX has caused some to question the value of the crypto. But FTX’s problems are precisely those that decentralized finance can solve through increased transparency and security. Crises like this help clarify the true merits of what we are all heading towards.
“The weeks and months ahead will be a challenging time for crypto, but we remain optimistic about crypto’s potential and are committed to building toward the positive future we know it can enable,” he said. he concluded.
Kraken CEO Jesse Powell says the damage to the crypto industry is huge and will take years to unravel. Binance CEO Changpeng Zhao compared the FTX fiasco to the 2008 financial crisis. He warned of the cascading effects of the collapse of the rival exchange. Former US Treasury Secretary Larry Summers compared FTX to Enron.
What do you think of the words of the co-founder of Paradigm? Let us know in the comments section below.
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