Digital currency has become widely popular in the last decade, especially in recent years for its convenience and lack of government regulation. During the pandemic, a large portion of society turned to cash apps such as Venmo, Paypal or Zelle in order to pay for food, groceries, and other necessities, and crypto currency became more popular as well. However, as many have heard by now, there was recently a major crypto-crash.
Though it may seem like the idea only recently took off, cryptocurrency is no new phenomenon. Digital currency can be traced back to the 1980’s, when the term was cyber currency. Crypto currency saw its first “big jump” the summer of 2010, and began to steadily rise in 2016. Thirty year old Sam Bankman-Fried, also referred to as SBF, rose to fame when his crypto exchange FTX became a household name by enabling traders to buy and sell digital assets like Bitcoin. Seemingly overnight, SBF became the richest twenty-nine year old in the world, but saw the downfall of his empire just as quickly.
Though the world is now digital, there is always a financial risk when it comes to digital currency. Data security should be top priority in any digital investment, especially when upgrading IT hardware containing digital assets. Many are unaware of the dangers of not properly disposing of IT assets, and when large corporations such as FTX fail, many digital assets stored on computers, tablets and phones are at risk as well.
According to the Wall Street Journal, “Sam Bankman-Fried was heralded as the savior of crypto.” The publication said his “eccentric, unkempt appearance created an aura of genius. Venture capitalists got on board. High-profile athletes and musicians, and a wave of FTX ads, encouraged regular people to use the exchange to tap crypto’s moneymaking potential.”
SBF’s troubles lay within his ties to Alameda Research, the sister trading firm which he founded and later recruited Caroline Ellison as chief executive. Despite passing down leadership, SBF owned 90 percent of Alameda and received the brunt of its downfall after a few details came to light about the trading irm’s special privileges including a “secret exemption” from the exchange’s process for liquidating bad trades. This enabled Alameda to take on more risks than other customers, which they did, often using FTX’s own cryptocurrency (FTT) as collateral. To make matters worse, SBF and Ellison were rumored to be romantically linked at times.
The Wall Street Journal wrote that, “When crypto prices plunged earlier this year, Alameda’s risky bets soured.” On behalf of FTX, Bankman-Fried lent billions of dollars worth of customer assets to help cover funding gaps of its sister trading firm. When CoinDesk published a report on November 2 indicating that most of Alameda’s balance sheet was made of FTT, many began questioning the financial stability of both FTX and Alameda.
Now under a new CEO, John R. Ray, FTX has filed for bankruptcy, and the state of the company deemed “unprecedented.” While Mr. Ray tries to sift through the chaos, many FTX customers are growing more concerned they will never see their money again.
ITAD facilities like HOBI provide top-tier data security via data sanitization and electronics recycling, which ensures no data remains on devices and all digital assets are protected. For more information about HOBI’s data security and other ITAD services call 817-814-2620, or contact HOBI at firstname.lastname@example.org.