Park High student urges caution when investing in crypto

Gus Glenn, Geyser Staff Writer

The Crash of FTX is just another reason to avoid cryptocurrency. Earlier this year the crypto Exchange FTX imploded. FTX is an exchange that is run by Sam Bankman fried a crypto investor who made a lot of money by using cryptocurrency from Japan and bringing it over to the US. Later, he founded Alameda research, which he ran for a while until he decided to make his own exchange.
The way the exchange worked, however, was not exactly a great set up. To give an example of how this exchange worked let us say that you invest $300,000 into a super rare baseball card such as a Babe Ruth card. This card will eventually be worth more because it’s a rare card, but let us say you do that tons of millions of times over and you have all those people’s money tied up into that card. When you go to sell the card, the card is not going to be worth as much as all the money that’s been invested in it. In reality, it’s not a baseball card, that is bad crypto, so when all these people invested their money into the crypto tried to pull out their money, there was not as much because all the money that FTX received they put into that coin.
Alameda Research ended up being run by Bankman’s ex-girlfriend. You could say that these companies were in bed together. Okay, so here is where the illegal part of this entire thing comes together. Sam Bankman was going behind investors’ backs, taking money, and giving it to Alameda Research , which his former girlfriend has no idea how to run.
Eventually people realized that FTX was a bad investment and so people started pulling their money out basically like a bank run, but they did not have everybody’s money because it was all in the coin that lost value. One notable person who lost a ton of money ended up being Tom Brady. This poor guy is going to be playing football in his 60s.
Swindles of this nature are not too uncommon with cryptocurrencies because there are lots of rug pulls, where people will take all the money out of a fraudulent coin. In general cryptocurrency is a very uncertain investment at this moment in time, but it is here to stay. The Federal government has even proposed introducing our own crypto for the US. With the fall of FTX many people have been asking for regulation over crypto. In my opinion this goes against what crypto was originally designed for, but I can see it being a good change.