The Galaxy Digital boss said the cryptocurrency industry is facing a deficit of trust at the moment following recent events.
Mike Novogratz, the CEO of Galaxy Digital, in an interview with CNBC on Wednesday, pointed out that there is a crisis of confidence in the market. According to Novogratz, the market will most likely not recover soon.
“Our industry has failed to self-regulate,” Galaxy Digital CEO Mike Novogratz says of cryptocurrency. https://t.co/YRU4JuDQA7 pic.twitter.com/x6iWF0Bbpp
— CNBC (@CNBC) November 23, 2022
Novogratz stated that;
“This is always about building trust with your clients. Right now, we are in a deficit of trust. People think there is a black swan around every corner and that everyone else is, you know, a sociopath, saying one thing and doing something else.”
FTX’s collapse occurred after documents revealed that the crypto exchange was using customer funds for investments without their permission. When asked about it, Novogratz said;
“As an exchange or a company, you are supposed to segregate customer accounts with your funds. You are not allowed to lend out customer funds unless you have permission to. When you look at companies like BlockFi and Celsius, it is clearly explained to the users that their funds would be lent out. However, that is not the case with cryptocurrency exchanges.”
The Galaxy Digital CEO lamented that the crypto industry has failed to self-regulate. He suggested that companies that deal with the money side of crypto, including Galaxy Digital, are going to be regulated.
Novogratz added that the tech side of crypto also has its own regulatory challenges like KYC (Know your customer) and AML (Anti-Money Laundering). He added that;
“It’s all about building trust with your client, and right now, we are facing a deficit of trust. People think there is a black swan around every corner, that everyone is a sociopath, saying one thing and doing something else.”
FTX’s bankruptcy is the second biggest loss of funds in the history of crypto, behind the collapse of LUNA.
In an interview two weeks ago, Novogratz said time would tell if FTX’s Bankman-Fried is guilty of financial crimes.