Proactive Investors - Coinsilium Group Ltd (AQUIS:COIN) has said it believes that that the FTX fiasco could prove to be an inflection point for the blockchain and cryptocurrency industry.
The company, in a statement alongside its AGM results, noted that neither it nor any of its investees or advisory clients had any direct exposure to the FTX collapse, but, chairman Malcolm Palle provided comment to investors in the wake of the crisis.
“We do expect the fall-out from this unfortunate event to result in further uncertainties for the broader digital asset markets, at least in the near to medium term,” Palle said.
“Whilst the story is still unfolding, from what has come to light so far, the FTX fiasco seems to have been a story of multiple failures in risk management, investors’ discernment and due diligence, community scrutiny and an overindulgence by certain Silicon Valley funds and their advisors in their backing of young, inexperienced founders who superficially appeared to tick all the right boxes for their purposes.”
He added: “From some future vantage point, we will no doubt look back at this event as an inflection point for the industry and it is already becoming abundantly clear that there is a pressing need for the implementation of more effective procedures and tools for the monitoring of trading and lending practices of centralised digital asset exchanges.”
Palle, meanwhile, described the centralised exchange model operated by the likes of FTX as being reliant on traditional financial technology and said such exchanges “effectively operate in a black box mode” where “client funds become hard to trace once deposited into an exchange’s multiple accounts and wallets.”
“We expect that this unfortunate event will now trigger an accelerated impetus towards the design and enforcement of better practices for the digital asset industry globally, but this will no doubt take time to happen.”
Regarding its own business, Coinsilium said it has a healthy cash position with £1.1mln cash at bank and approx. £1.3mln in crypto treasury reserves (held predominantly in Bitcoin and Ethereum).
“We continue to manage our resources pragmatically, and our priority is now to ensure that we continue to remain on the right side of this difficult market cycle and that we are ready and prepared to resume the drive for growth when the cycle turns, and more positive market conditions prevail,” Palle added.