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Potential Implications of FTX's Collapse on Cryptocurrency in Sports Wagering

Despite speculations of its imminent collapse, the embattled currency's downfall might not be as imminent as suggested. However, the potential for further seismic effects in its future is unavoidable.

,   and  ASMedia
3 min read
Future shocks for the troubled currency are unavoidable, despite rumors of its imminent collapse...
Future shocks for the troubled currency are unavoidable, despite rumors of its imminent collapse potentially being exaggerated.

Potential Implications of FTX's Collapse on Cryptocurrency in Sports Wagering

It appears the crypto world is facing a major shakeup following FTX's spectacular crash, one of the most significant collapses in the cryptocurrency exchange sector.

The Economist wasn't exactly wrong when they wrote "crypto never looked so criminal, wasteful, and useless," but let's delve a bit deeper.

Rogue elements unmasked

FTX's fall from grace is a cautionary tale of what happens when companies cut corners and ignore fundamental principles of responsibility. Sam Bankman-Fried, FTX's erstwhile CEO, pledged not to loan billions of dollars to his trading arm. Well, apparently he did, and when customers tried to withdraw their money en masse, FTX struggled to cover its obligations.

Investigations have revealed that Bankman-Fried, often known as SBF, employed Daniel Friedberg as his regulatory officer. This choice of staff took a darker turn when it was discovered that Friedberg had faced accusations in the past for minimizing restitution arising from an insider-cheating scandal in the online poker world.

The presence of Friedberg on the FTX payroll raises questions about SBF's due diligence and receipt of pertinent information about Friedberg's past transgressions. Neither painting a picture that reflects well on SBF.

Famous faces, shady practices

FTX, eager to establish itself as a major player, splashed its name across sporting arenas, Formula One cars, and Major League Baseball umpires' blue polo shirts. Celebrity pitchmen like Tom Brady and Steph Curry were brought on board.

However, the company attracted unwanted attention when a class action lawsuit was filed, accusing FTX and its parters, including Brady and Curry, of exploiting unsophisticated investors in a Ponzi-like scheme.

Congress steps in

The FTX meltdown has sparked Congress to launch an investigation, with the House Financial Services Committee chair Maxine Waters stating that digital assets entities require federal oversight and clear rules to ensure they cannot operate in the shadows.

The collision of crypto and sports betting

Although FTX's fall may have been a blow to the wider crypto sector, it may have positive implications for sports betting, given increased regulatory scrutiny and the opportunity for industry enhancement.

Two sports betting companies, BetDEX and PlayUp, initially seemed vulnerable amid FTX's collapse due to investment or potential investment related ties to the exchange. However, both appear to have emerged unscathed on separate grounds.

BetDEX, co-founded by Nigel Eccles (former FanDuel CEO), secured its investment from FTX before the collapse and maintains that the underlying technology remains undiminished.

PlayUp weathered the storm thanks to internal strife, with its former CEO Laila Mintas facing legal action for allegedly sabotaging a proposed acquisition by FTX in 2021.

Mintas has since co-founded a new sports betting platform, PlayEngine, that aims to capitalize on the crypto sector, proclaiming that full crypto compatibility is essential for future success.

Mintas remains optimistic about the future of crypto betting and believes that it will continue to grow, despite FTX's downfall. She sees the collapse as a Learning curve for the industry, eventually leading to improvements in regulation and compliance.

Thawfeek Ameen, chief marketing officer for betting platform Betswap, echoes this sentiment. Ameen, who began working in the crypto sector in 2014, maintains that downturns are crucial for fostering strong, resilient businesses.

In conclusion, the FTX crash marks a turning point for the crypto industry. Regulatory scrutiny will undoubtedly increase, leading to enhanced oversight and stricter compliance measures. While public trust in cryptocurrency exchanges may be shaken, the underlying technology appears poised for continued growth and evolution.

  • The fall of FTX, a major player in sports betting, provides an opportunity to reevaluate the industry, as increased regulatory scrutiny may bring about enhancements in sports betting, similar to what happened after FTX's collapse in the crypto sector.
  • The presence of Daniel Friedberg, formerly employed as a regulatory officer at FTX, raises questions about the due diligence of Sam Bankman-Fried (SBF), FTX's former CEO, in light of Friedberg's past transgressions in the online poker world.
  • The collapse of FTX has led to the launch of an investigation by Congress, with the House Financial Services Committee aiming to establish clear rules for digital asset entities to prevent them from operating in the shadows, as they are ports for sports betting activities.

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