Travis Kling, founder and Chief Investment Officer of Ikigai Asset Management, has revealed his firm had a large majority of its funds in FTX and “got very little out”:
“Last week Ikigai was caught up in the FTX collapse. We had a large majority of the hedge fund’s total assets on FTX. By the time we went to withdraw Monday mrng, we got very little out. We’re now stuck alongside everyone else.
“It was entirely my fault and not anyone else’s. I lost my investors’ money after they put faith in me to manage risk and I am truly sorry for that. I have publicly endorsed FTX many times and I am truly sorry for that. I was wrong.”
Jason Yanowitz, founder of crypto media outlet Blockworks, joined a growing chorus of crypto leaders expressing their frustrations with a lack of coverage given to SBFs supposed responsibility for FTX’s bankruptcy, as opposed to attention given to the technology and wider industry:
“NYT’s puff piece on SBF makes even less sense when you remember that they wrote hit pieces on Coinbase and Kraken all year.”
Jake Chervinsky, head of policy at the Blockchain Association crypto lobbyist group, said a certain amount of blame for the FTX fallout belongs to U.S. regulators:
“There’s still so much we don’t know about FTX. The investigations will be, and should be, extensive and unrelenting. But in addition to investigating FTX, we need to know how US regulators got this so wrong. Until then, none of them deserve more authority to regulate crypto.”
Caroline Bowler, CEO of the Australian crypto exchange BTC Markets, emphasizes the need to regulate “human behavior” over technology:
“We have seen over the past week, the misuse of client funds to prop up insolvent organizations. Reports on the collapse of FTX, seem to suggest that it was a strategic decision by their management team, to utilize clients’ funds to support their own proprietary trading desk.
“The impact is certainly moving through the market. We see the contamination effect filter to other exchanges and platforms, due to the interconnectedness of FTX and their investments.
“The focus needs to be on regulating human behavior rather than the underlying technology. Assets such as Bitcoin and Ethereum should not be part of the discussion. Instead, it’s the behavior of the management who made these erroneous decisions with client funds that needs scrutiny.”
“If you have an external independent, licensed custodian, we would never have gotten into this situation because they couldn’t have had access to customer deposits…The ledger would have been at least managed by an independent party versus the kind of internal ledger that they were using between FTX and Alameda.
“The frosting on the cake was the ‘hack’ where employees were leaving, nobody knew who was in charge of what, and then all of a sudden funds disappear because you don’t know who’s in control of the private keys.
“Investors are guilty in this case of throwing money [at FTX] without asking for really basic things like segregation [of] clients’ assets. The fact that investors were not demanding this was quite embarrassing.”
Venture capitalist Kevin O’Leary says FTX’s liquidity crunch provided an “interesting” investment opportunity, but was put off due to comments from U.S. Securities and Exchange Commission Chair Gary Gensler:
“In financial services, liquidity events like this can be interesting investment opportunities if you think it’s a legitimate investment and it’s not an issue with the regulator.
“The minute [SEC Chair Gensler said crypto was “significantly non-compliant”], that was the end of any sovereign wealth fund’s interest … There was no way to get that $8 billion onto the balance sheet of FTX with the regulators hovering overhead.
“This does not kill crypto, there’s going to be a silver lining to this disaster. There’s no question about it. It’ll be called regulation.”