Opinion: Crypto is out of control. FTX is just the latest example

Editor’s Note: Casey Michel is a writer and investigative journalist covering kleptocracy and dark money networks across the globe. He is the author of “American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History,” and is at work on a book investigating foreign lobbying in Washington. The opinions expressed in this article are his own. Read more opinion at CNN.com.

CNN
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As investigators and authorities continue to sort through the fallout of the collapse of cryptocurrency exchange FTX, the contours of the implosion are becoming clearer. It will likely take many more months to disentangle the web of corporate greed and financial malfeasance at the heart of FTX’s bankruptcy. But we can safely say that the company owes billions of dollars to creditors and, according to sources, at least $1 billion to clients, in what appears to be the greatest crypto collapse to date.

Friendly legislators, regulators and celebrities granted former FTX CEO Sam Bankman-Fried legitimacy, but all the while, he was reportedly moving clients’ funds to prop up his related trading house, allowing him and the company to rise so high, and collapse so quickly. And it was smoke and mirrors that hid how quickly the crypto industry had become part of the offshoring economy, and how easily traditional offshore havens have made that possible.

If anything, FTX’s stupendous collapse shines a light on just how symbiotic the entire crypto industry now is with the world of offshore finance – and how open the entire industry is to fraudsters and scammers, with offshore havens racing to offer crooks the kinds of allowances, and lack of regulation, they need to thrive.

On Wednesday, during a virtual interview at the New York Times’ DealBook Summit, Bankman-Fried said he “screwed up” and accepted responsibility for the failure of his company, but denied that he tried to defraud investors and clients. But Bankman-Fried’s and FTX’s implosion is something that the crypto industry, and even those broadly familiar with the financial world, could have – and likely should have – foreseen. Not only were there all kinds of red flags about FTX’s background, but Bankman-Fried also decided to base his operations in the Bahamas, one…