World’s Largest AUM Firms Take on FTX Fall

Globally renowned Blackrock Inc.’s CEO, Larry Fink recently shared his views on crypto exchanges’ future in the background of FTX’s fall.

Blackrock is currently the biggest asset management company in the world which was co-founded by Fink. The assets under management by the firm exceed value above US$ 8 Trillion as of the 3rd Quarter of 2022.

Prior to inflation coming in, which then led to exorbitant interest rates, Blackrock was managing assets worth US$ 10 Billion.

Fink was being interviewed at the occasion of the New York Times Dealbook Summit which was held the past week. While recording his interview, Fink took the liberty of commenting on the crisis caused by FTX in the crypto market.

It may however be noted that amongst FTX’s investors, Blackrock also was one of the prominent investors in FTX.

As per media reports, the world’s largest asset management firm, Blackrock, had injected approximately $24 Million into FTX.

Fink Predicts Dark Future Ahead For Global Crypto Exchanges

Fink said that he is anxious to see how FTX’s story ends particularly after the appearance of serious allegations against FTX. He then suggested that he is unable to see a bright future ahead for a number of crypto firms.

He believed that several crypto firms with which people are quite familiar will not be able to cope with the post-FTX crisis.

Irrespective of the FTX crisis, Fink stated that though crypto firms’ future is dark yet a bright future is there for blockchain technology. He stressed that blockchain will play a very crucial role in the strengthening global financial system.

Fink emphasized that in the future, the next generation will heavily rely on securities which would be ‘tokenized securities.

No Safe Exit for FTX

Although FTX was one of the three largest crypto trading and custodial platforms of centralized nature, the firm collapsed recently.

A non-resistible liquidity crisis impacted the firm’s ability to survive and resultantly FTX was forced to seek bankruptcy protection.

Sam Bankman-Fried, who founded FTX and later became the firm’s CEO, resigned from the post soon after seeking bankruptcy protection.

However, it seems that FTX would not be able to get a ‘safe exist’.

Bankruptcy proceedings shall be concluded this week. Currently, FTX owes billions of dollars to approximately one million creditors.

FTX investigations suggest that FTX and its management had been accused of maladministration of funds belonging to investors, creditors, and customers.

Apart from Blackrock, there were other foreign asset management firms that had been the prominent investment partners of FTX.

Some of the biggest AUM firm names’ included Temasek Holdings and Pension Plan of Ontario Teachers of Singapore.

Calls for Strict Oversight

FTX’s fall has forced many to call for strict oversight of the crypto industry, particularly crypto trading platforms. The most recent call was strongly emphasized by way of Janet Yellen, Treasury Secretary of the US.

Yellen claimed that crypto should no longer be allowed to exist without adequate and proper regulation. She argued that grave danger is lurking upon investors who assume crypto to be a better investment alternative.

Blackrock’s CEO has however suggested a dark future ahead of crypto firms. He is certain that FTX’s downfall would not end the crisis but would take over various other notable platforms.

Fink may be wrong but the FTX crisis is obvious and is sharply affecting the global crypto economy. From the amount of damage the FTX exchange has caused, things may not recover any time soon.

With every passing day, the situation of the crypto market is growing even more negative. This is because more and more firms are revealing their links with the FTX exchange.

With every firm going down, the confidence level of the investors is fading. They are losing their trust in the crypto exchanges and the proof-of-reserve may not help many cryptocurrency exchanges in the future.