The Rise and Fall of Native Cryptocurrencies: Insights into the FTX Collapse

The Crypto Tsunami: A Year of Volatility

This year has been nothing short of a rollercoaster ride for the crypto industry, with native cryptocurrencies playing the lead role in numerous exchanges’ tragic downfalls. The recent collapse of FTX, a notorious exchange that once held its head high, serves as a glaring example of how virtual currencies can swiftly turn from boosters to boomerangs.

KoFIU Takes the Stand: Investigating In-House Tokens

The Korea Financial Intelligence Unit (KoFIU) has decided it’s time for a deep dive into the murky waters of in-house, self-issued tokens. Imagine them as the detectives of the crypto world, examining the shenanigans that were happening with native tokens on Korean exchanges.

No Native Tokens, No Problem… or Is It?

With Korean exchanges already prohibited from issuing their native tokens, KoFIU’s investigation aims to keep the investors’ safety in check. After all, who wants to be swimming in a pool of uncertainty? Their initial findings indicate that larger exchanges have kept things above board, but smaller players, like Flata Exchange, are under closer scrutiny.

FTX: A Case Study of Too Much Too Fast

The collapse of FTX is more than just a headline; it’s an epic saga featuring a cast of characters filled with ambition, greed, and, of course, a crash. In October, the value of its native token, FTX Token (FTT), plummeted, leading to a ripple effect across the industry and triggering bankruptcy filings for the exchange and its 130 affiliates. It’s like watching a magician pull a rabbit out of a hat, only for the rabbit to turn into a brick mid-air.

South Korea: Caught in the Crossfire

With around 297,229 unique users flocking to FTX each month, South Korea has been significantly rocked by the FTX fallout. It ranks at the top for the number of casualties, not exactly a title anyone would brag about. This chaotic turn of events has pushed authorities into high gear.

Legal Maneuvers: The Battle Around Shin Hyun-seong

In a different twist, South Korean prosecutors are also taking steps to investigate the actions of FTX co-founder Shin Hyun-seong. Allegations regarding his participation in suspicious LUNA sales have resulted in a $104.4 million asset freeze. The Seoul Southern District Court’s approval to halt financial flow until investigations are concluded serves as a wake-up call for all involved. One wrong turn in this wild world of crypto, and you could be on the wrong side of a judicial juggernaut.

Moving Forward: A Cautionary Tale

The FTX debacle, alongside KoFIU’s proactive approach, illustrates that the crypto landscape is fraught with risks—including the unregulated art of native tokens. As these investigations unfold, the hope is that tighter regulations will not only protect investors but also lead to a more responsible crypto ecosystem where tokens don’t crash parties, but rather foster them.