The power vacuum at top of crypto industry
SAN FRANCISCO — The price of Bitcoin is surging again. Major financial firms are showing renewed inter- est in digital currencies. And crypto fanatics are celebrat- ing the end of a long period of depressed prices and busi- ness collapses.
But the sudden explosion of optimism has come at a turbulent moment for the cryp- tocurrency industry.
The last time crypto prices were skyrocketing, the industry’s most influ- ential executives were Sam Bankman-Fried and Chang- peng Zhao, rival billionaires whose online sparring could move markets. Now Bank- man-Fried, founder of the FTX crypto exchange, and Zhao, who ran the world’s largest crypto firm, Binance, both face prison time after paral- lel falls from power.
A federal jury convicted Bankman-Fried last month on fraud and conspiracy charges stemming from FTX’s col- lapse. Three weeks later, Zhao pleaded guilty to a money laundering charge and agreed to relinquish con- trol of Binance.
With the two men out of the picture, a crowded field of crypto entrepreneurs, Wa Street executives and govern- ment regulators are vying to control the industry’s next chapter. Their scramble for influence could determine whether crypto survives in the United States, where a regulatory crackdown has made it increasingly difficult for the industry to operate.
Some executives have argued that the crypto world needed to purge figures like Zhao and Bankman-Fried — aggressive entrepreneurs who gave priority to growth over compliance — to win over reg- ulators and the public.
After Zhao’s guilty plea, Brian Armstrong, CEO of the U.S.-based crypto exchange Coinbase, hailed the case as a turning point for the industry.
now have an opportu- nity to start a new chapter,” Armstrong posted on social media last month. “This indus- try should be built right here in America, in a compliant way, under U.S. law.”
But the crypto world remains filled with compa- nies that engage in risky busi- ness practices and don’t offer much transparency about their experimental products.
“There is no intrinsic value to any of this,” said Hilary Allen, an expert on financial regulation at American University. “The only hope is to have more money sloshing around, and more people willing to buy into it to create demand.”
Crypto has always had its share of influential leaders. The vision behind bitcoin, the original and most valuable digital currency, was first laid out by someone using the pseudonym Satoshi Nakamoto, whose my terious identity became its own brand.
As the crypto world expanded, new centers of powerandinfluenceeme ged. Zhao founded Binance in 2017 and built it into the world’s largest marketplace for buying selling experimental coins.