The crypto winter continues. FTX, the second largest cryptocurrency exchange, declared bankruptcy today and the founder Sam Bankman-fried stepped down.
There is some Canadian connection here. The Ontario Teachers Pension Plan invested $95 million in FTX, but they said impact is limited because it only counts 0.05% of its total net asset. This emphasizes the rule to only invest in something risky with the amount one can afford to lose. The institutional investors can just write off the loss, but retail investors’ suffering is in different level. Perhaps some would say it is their own faults. They should not play with fire or be so greedy. Perhaps more compassion is necessary? Financial literacy is sorely lacking as always. Advertising “Fortune favors the brave” were all the rage out there not long ago. We all make mistakes somehow just in different ways.
The retail investors got very little protection. Our Canadian bank account is protected by CDIC – Canadian Deposit Insurance Corporation. It doesn’t cover crypto. Check out what is covered and what is not in details here. We need more regulations to protect investors especially the retail investors.
Quite a few articles headline how many billions Bankman-Fried lost. It feels a bit sour grape mindset. They might think if I lose all my money, it would be so painful. The amount they lost is many times over my amount, so their pain must be many times over. 😊 I am not sure that is the case. I guessed the pain is mainly from their thwarted ambition.