'That's What Ended Up Breaking It': Vitalik Buterin Tells Benzinga What Broke FTX, Why Solana, Ethereum Didn't Fail

Ethereum co-founder Vitalik Buterin took a dig at FTX chief Sam Bankman-Fried over his donations to political leaders and said donating large amounts to politicians is what ended up breaking the cryptocurrency exchange.

In an apparent jab at U.S. regulators, Buterin also said FTX is headquartered in the Bahamas and the location was chosen in part due to a lack of a regulatory framework, such as the one which exists in the United States.

See Also: $600M In Crypto Mysteriously Flow Out From FTX Wallets As Exchange Potentially Hacked

FTX "was an exchange run by a person who is very politically connected and apparently was in the process of trying pretty hard to get some no-action letters from the SEC. He donated a huge amount to all kinds of politicians and that was what ended up breaking it," Buterin said, addressing a gathering at the LaBitConf in Buenos Aires, Argentina.

He added that even as the FTX fiasco unfolded, there were several big-ticket projects, like Ethereum ETH/USD and Solana SOL/USD which did not fail.

According to Buterin, DeFi and self-custody options work better and people instead use centralized platforms as they provide convenience which self-custody does not.

“Like setting up self-custody is still hard. You have to figure out a way to have safe wallets, you have to carry your hardware wallet around, and you have to write down all the words and lots of complexities. But centralized options are like, you know, he's a nice guy. His face is all over San Francisco. So just put the coins on this platform, and it is trustworthy,” he said.

For what was considered to be the third-largest cryptocurrency exchange in the world, FTX’s rapid decline into bankruptcy has undoubtedly sent shockwaves through the global crypto market, spooking millions of investors and roiling the cryptocurrency markets further.

However, what initially seemed to be just another case of an overleveraged crypto firm going bust due to the price volatility of its native token, has now opened a can of worms that could undermine the stability of the entire crypto ecosystem.

See Also: With Bitcoin, Ether And Altcoins Drowning In A Sea Of Blood, Can Investors Hope To Catch A Falling Knife?

Thanks @VitalikButerin great reply pic.twitter.com/Zi6WodyiTt

— Jose Rodrigo (@SafdiyeJose) November 12, 2022