The FTX Situation - Promoters Should Have Known Better

FTX, and FTX US, filed for bankruptcy protection this morning. Here's an overview of the situation, and why I think the finance YouTube space needs to pay attention.

DISCLAIMER: This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[HowMoneyWorks]

The crypto industry 📉

Richard’s biceps 📈

[timelston]

I stopped listening to Graham Stephen, Minority Mindset, and Andre Jikh a long time ago for the very reason that they were becoming reckless in their recommendations and untethered from the sensible principles they started out with. Very few channels have kept their heads and maintained a fiduciary spirit like you have done.

[CatsMeowPaw]

A lot of influencers are about to realize saying 'not financial advice' before giving their 10 minute sales pitch is about as useful as a thief yelling 'this is not a robbery' while they beat you and steal your wallet.

[godofallthingsandall]

I worked in AML regulation at the international level. The international standards setter for AML (the FATF) knew there was a huge risk that exchanges would mislead consumers as FTX did. FTX - like all crypto exchanges around the world - have some AML supervision. The FATF's final decision was that each country should try and ensure that customers were not misled by exchanges. Clearly, the US did not do enough given that website example.
Great to see an ethical channel.

[Squigglydodah]

I think at some point in the future we're going to see a similar failure in all these companies that are promoting fractional ownership of art as an investment. The creating a bubble and absolutely no one actually gets any claim on that piece of art. Just a matter of time till that one blows up too

[JosephDickson]

The fact that they advertise through influencers is a red flag in itself.

[BusterDarcy]

It’s weird how many people think they want finance to be unregulated but then get incredibly burned because of that, as though there was no way to see that coming when they literally asked for it.

Schadenfreude aside, a lot of people just got duped into thinking this was in fact safe when it never was and I feel terrible for those people right now.

[itsvmmc]

Now we are witnessing a real digital bank run. Many people were curious how these things happen, yet here it is in front of us.

[MrDennis]

My biggest skepticism about crypto is that it produces nothing of value apart from people believing it will be the future currency of the world which begs a questions, 'Has any currency currently been able to appreciate infinitely? Obviously not. If this is the case then why do people believe crypto will be different? To me crypto hype is more of a cult than real finance

[ignitionSoldier]

I dodged a big bullet on this one. I almost got suckered into purchasing some FTT tokens last year, but I thought it was way too risky. I'll stick to buying index funds...

[phinny]

I've watched enough Plain Bagel videos to know that the way Richard said "Be safe out there" this time wasn't just a sign off, it was very serious advice directed at crypto investors.

[evelynclare]

He was shady, funneling customer funds to his other company. To prop up his own tokens that he created, and using that as collateral, which is worthless in the first place. Basically running a scheme, and he should face prison time.

[sounddude]

If I was a teacher in Ontario who had a pension funded by FTX, I would be so pissed.

[kalibbailey]

Its wild to me that these companies cant just be happy getting a ~1% commission on an absurd number of transactions, to the point they just ruin it

[artarealmblazer]

Don’t forget Graham Stephen, Andrew Jihk, MeetKevin and a bunch of other financial YouTubers shilled this garbage company all year long.

[samsonsoturian]

All the crypto banks are secretly insolvent. It's a systemic problem.

[perochialjoe]

If Plain Bagel ever needed an Exhibit A for why his "Influencer Marketing is Ruining the Investment Industry" video was correct.... there you go.

[REACTIONSUNLIMITED]

When something is not regulated, think twice. Your money is not protected. Period.

[theexnay]

This is why the FDIC is so important. It sounded like they would have been fine if there wasn’t a bank run. There was a bank run because people knew that if there was a bank run then their money would disappear. But if they were insured by the FDIC, then there wouldn’t have been a bank run in the first place.

Since these institutions aren’t regulated or insured, people need to decentralise their DeFi better. Like, in private wallets.

[jackmann]

People should know that this affects FTX US too. Bradley over at growscoin reported his withdrawal was blocked as well as numerous people. The FTX US is also part of the chapter 11 bankruptcy restructuring. This could get worse. Be careful folks.