- Advertisement -
Former Treasury Secretary Larry Summers has compared the sudden decline of cryptocurrency exchange FTX to the scandal of energy trader Enron in the early 2000s.
In a “Wall Street Week” interview with Bloomberg, he Told While “many” people have compared it to Lehman, they believe it is similar to the Enron scandal.
Lehman Brothers was an investment bank that collapsed in 2008. It is the biggest bankruptcy of its time as it took 14 years for its liquidation. Trustee James W. Giddens was eventually able to return more than $115 billion to customers and creditors.
On the other hand, the Enron scandal was an accounting scandal involving the Enron Corporation, an American energy company that declared bankruptcy in 2001 after it was discovered that the company was engaged in shady off-the-book business and accounting practices.
“A lot of people have compared it to Lehman. I’d compare it to Enron,” Summers said, adding:
“The smartest guys in the room. Not just financial error but—certainly from the report—whispers of fraud. Naming the very first stadium in company history. Huge explosion of money that no one understands where it comes from. “
The summer comparison between FTX and Enron comes because of the many similarities in the way they approach their downfall. For example, Enron signed a $100 million, 30-year sponsorship deal with the Houston Astros to name their stadium Enron Field, while FTX paid $135 to name the NBA’s Miami Heat home, FTX Arena. Million, signed a 19-year deal.
as informed ofFTX’s desperate scramble for investors to repair its balance sheet finally came to an end on Friday, when the company filed for Chapter 11 bankruptcy, sparking a sudden and shocking decline for one of the world’s largest cryptocurrency exchanges. Gave.
Notably, the US arm of crypto exchange FTX US has also been implicated in the proceedings, despite the former CEO’s claims that his US exchange was fine.
While many industry experts have warned that more regulatory scrutiny is coming after the FTX drama, Summers noted that the exchange’s decline is not about a lack of regulatory oversight, but about “very basic financial principles” that should be followed. was overlooked by FTX officials.
“It’s probably less about the nuances of crypto regulation rules and more about some very basic financial principles that go back to the financial scandals that happened in ancient Rome,” Summers said in a Bloomberg interview.