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Stablecoins likely next in risk line, Karpelès says

A downward spiral of an algorithmic stablecoin was the beginning of the cryptocurrency industry’s troubles in 2022. Former Mt.Gox CEO Mark Karpelès says that the stablecoin drama is not over.

Welcome to Forkast Forecasts 2023. In this series, leaders, innovators and visionaries in blockchains share their industry predictions for the year ahead.

Mark Karpelès

Mark Karpelès is the former chief executive officer of the defunct Bitcoin exchange Mt.Gox. The platform filed for bankruptcy in 2014 after a major hack. At its height, Mt.Gox was responsible for around 80% of Bitcoin all traded in the market.

Karpelès recently announced his new project UnGox, which he defines as a risk analysis company for crypto assets.

Predictions for 2023

Could another stablecoin collapse?

“I don’t know if it will be next year or later, [but we will see] some issues coming up with stablecoins, at least one of them. I don’t know which one yet. But the same thing that happened to FTX was definitely at some point going to happen with a centralized exchange. And stablecoins are very likely the next on the line in terms of risk.”

Seasoned crypto investors may switch to DeFi

“DeFi (decentralized finance) is definitely going to gain a lot from [the FTX] bankruptcy and a lot of people are going to be switching to DeFi. But it’s still too difficult to use, especially for new users. So, centralized exchanges are still likely to be the starting ramp for almost everyone trying to get into crypto. DeFi has a lot of interesting points but it also has some limitations… There should be a hybrid model for centralized exchanges that doesn’t actually get deposits but puts them in a smart contract. Then you’re able to trade on the exchange. That could be an interesting step forward.”

Cryptocurrency exchanges will strive toward transparency

“The FTX bankruptcy is a wake-up call for a lot of people. It’s great to be driving the way the industry moves next year because we know for sure that security is very important and we want to make sure that we don’t do the same as we did eight years ago and just forget about it. We need to make sure we keep looking and monitoring exchanges for assets, liabilities and raise the alarm should anyone either stop providing information or maybe provide information that looks sketchy.”