CoinLion founder on the ripple effects of FTX
SIOUX FALLS, S.D. (KELO) — A cryptocurrency crisis is unfolding across the globe as FTX, the world’s 3rd largest crypto exchange, collapsed, filing for bankruptcy last week.
In tonight’s Your Money Matters, the owner of a Sioux Falls-based crypto trading company weighs in on the impact across the industry.
“The ripple effect from FTX is going to be huge, it’s going to be felt literally around the world,” Sioux Falls business owner Eric McDonald said.
Eric McDonald is the founder of CoinLion, an auto trading platform for cryptocurrency, he says the collapse of the $30 billion company in the span of a week will be felt by people in every country in the world.
“You have about a million users that are essentially short 8 billion dollars. They’re basically stuck,” McDonald said. “There’s a hope maybe that over the course of a couple years, some of that could be recovered. If I’m one of those users, the likelihood you’re going to see some of the $8 billion is very, very small.”
While crypto traders are no stranger to volatility…
“Crypto is definitely a risky business; be very cautious that you’re in the right spot in life to be able to take a risk,” McDonald said.
McDonald says what happened at the Bahamas-based FTX is extreme and the result of no regulation.
“There was nobody governing this organization, no standards they were adhering to, you wouldn’t see this happen in the U.S. because of the regulations, while they’re not perfect, they’re better than what we just saw,” McDonald said.
He expects the ongoing investigation into FTX will lead to some better regulations and improvements in time, but in the short term, he says crypto investors should prepare for more volatility.
“They’re going to falter a little here, going to see prices struggle as there’s fallout from both earlier this year as well as FTX,” McDonald said.
McDonald says the crypto market in general is down 60 to 70 percent since the start of the year, but he believes this kind of digital currency will continue to grow.
“Crypto is not going away, crypto is going to be here for the long hall,” McDonald said.
“Everyone gets so excited when the market is moving up, vs. hey the markets pull back, now is a really good time to get into the market given how low it is. The mentality of most people is to pull when it’s going high buy when it’s going low.”
Wednesday the House Financial Services Committee announced it will hold a hearing next month to investigate the collapse of FTX in response to calls for more federal regulation in the industry.