The collapse of crypto giant, FTX last week, has stirred panic in the digital currency world, as some enthusiastic investors in the new money are admitting for the first time there is a need for regulation.
FTX (Futures Exchange), the second-largest crypto exchange, next to Binance Crypto, has filed for bankruptcy, leaving its customers wondering what to do next.
Embattled cryptocurrency exchange FTX has filed for bankruptcy in the US, seeking court protection as it looks for a way to return money to users.
Former boss Sam Bankman-Fried has also stepped down as chief executive, the company said.
Mr Bankman-Fried had been one of the stars of the crypto scene, drawing comparisons to investment magnate Warren Buffett, with a net worth estimated at more than $15bn (£12.8bn) as recently as Monday, according to a Reuters report.
“Definitely, as we speak there is fear. You can see the fear,” a crypto investor told Daily Trust over the phone from Lagos.
“When the news broke out that FTX was having issues, customers ran to see if they could withdraw their money, but they are already locked in,” said the public service employee in his early 50s, who does not want his name mentioned. He has been a crypto investor for at least five years.
There are two likely causes of this collapse. First, it is possible that FTX’s system was hacked and some of its coins were removed and the company ran into trouble. The second possibility, he said, is that they could have made a wrong investment.
“You know, they had some idle money. They are like banks, and when banks have idle money, they like to invest it. But the crypto world is not like the banking world,” he said.
The crash has led to a fall in the price of bitcoin, which has fallen by 13.75 per cent in seven days to Monday. Its price peaked in November 2021, when it hit about $68,000. On Monday, it was worth about $16,54, but analysts said it could fall below $14,00.
“People want to withdraw their money; they are losing confidence, and they are now asking for regulation of the crypto market,” said a crypto trader.
But another crypto investor, a woman who is less than a year into the digital currency world, said there is no cause for alarm. “There is really no problem with the crypto world. Many people are skeptical; they are afraid that they will lose money,” she explained.
“When it is down, you can buy more, you don’t sell. You could just buy more, and when it is up, that is when to sell,” she said.
She does not subscribe to the idea of regulating the digital currency market. She cites the experience of one of the richest men in the crypto business, who rode the fluctuations in the business and ultimately pulled through.
But the male investor insists that the time has come for the crypto world to be regulated. “Coincidentally, the boss of Binance is now beginning to agree that there is a need for regulation of the market,” he said.
Changpeng Zhao, the head of Binance Crypto, told G20 leaders at their summit in Bali that there were bad players in the industry, Reuters reported.
“So, but the regulators do have a role. We do need slightly more; we do need to increase the clarity of regulations and the sophistication of regulations in the crypto space.”
The regulation should be done by each country’s monetary authorities, said Appolos Nwaobia, a professor and head of the Accounting Department, at Babcock University, Ilishan-Remo, Ogun State.