Ripple CEO agreed that the FTX story is somewhat similar to the Ponzi scheme

Like most members of the cryptocurrency community these days, Ripple Labs CTO David Schwartz shared his opinion on the FTX bankruptcy. Schwartz spoke about the similarities and differences between Sam Bankman-Fried's platform and the Ponzi scheme.

According to Ripple’s CTO, unlike Bernie Madoff (the founder of the largest Ponzi scheme in US history), Sam Bankman-Fried started FTX as a legal cryptocurrency business that was supposed to bring users profit. However, as Schwartz explained, over time, FTX turned into the same pyramid scheme. The transformation of the exchange into a Ponzi scheme began when Alameda Research, a company associated with FTX, started losing money — Bankman-Fried wanted to make a profit, so he started «playing not by the rules of the legal crypto market.»

I'm seeing SBF compared to Madoff. There are huge apparent differences, at least now. Madoff started off a Ponzi and maybe he hoped to replace it with legitimate profits at some future point. SBF seems to have started off legitimate then gradually replaced it with a Ponzi. 1/6

— David «JoelKatz» Schwartz (@JoelKatz) November 12, 2022

Vitalik Buterin, the father of Ethereum, also expressed his opinion on the FTX collapse: «The MtGox exchange looked ambiguous and never tried to whitewash its reputation. So did Luna. FTX looked like the complete opposite, emphasizing the point of its compliance with [законодавства] (not the same as compliance). This type of fraud goes deeper than the first.»

As for the current situation at FTX: the cryptocurrency exchange was hacked by hackers, according to preliminary data from investigators, digital assets worth more than $ 600 million were stolen. There are rumors on the web that the dismissed employees of the crypto exchange may have been involved. Also yesterday, the exchange published a press release, according to which Sam Bankman-Fried is leaving the position of FTX CEO, and the company is declaring bankruptcy. Bankman-Fried is currently under investigation by the SEC. Just a day after the Binance-prydbaye-kryptobirzhu-ftx/" data-wpel-link="internal">announcement of the acquisition, cryptocurrency exchange Binance refused to acquire FTX. The company stated that they were unable to resolve the problems on the platform.