Kraken’s Jesse Powell says crypto community should ‘raise standards’ to put end to bad actors Kraken’s Jesse Powell says crypto community should ‘raise standards’ to put end to bad actors
Expressing his anguish on the FTX collapse, Powell said that the crypto space should stop being trusting and start to verify.
2 min read
Updated: Oct. 9, 2023 at 4:59 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto exchange Kraken‘s founder and chairman Jessee Powell shared his anguish regarding the FTX collapse on his Twitter account and said that it is time the crypto community should stop being too trusting and raised its standards.
Powell’s 14-Tweet-long thread calls out to the whole of the crypto community, including investors, venture capitals, and regulators, and warns them to recognize red flags and push such people out of the industry before it’s too late.
Trust should be replaced with verification
Powell’s major focus was on the good, trusting nature of the crypto community. As per the nature of crypto and blockchain, people who are involved in the area carry a desire to be genuinely helpful and innovate for the better.
2/ Our good, trusting nature makes us easy targets for con artists. Some even tell us straight up that they're here for profits, not crypto, and we praise them for their honesty.
Yet we're surprised when they turn out to be who they said they are. We need to raise our standards.
— Jesse Powell (@jespow) November 10, 2022
Powell also said that it made the community vulnerable to con artists, even ones who make their financial greed visible from the beginning. These people, as Powell described, don’t hesitate to “sell us out for their own interests” while “we let clowns ride under our banner.”
Referring to the Terra-LUNA crash in May, Powell said that the last few months have been brutal for the crypto sphere. The implosion of a crypto exchange is like a gift to all Bitcoin haters, and it will fuel their claims against crypto. Powell said that recovering the sentiment around crypto will take years.
Venture Capitals are to blame too
Next, Powell snapped at Venture Capital firms and said that they failed at their “duty to be critical and withhold undue praise.”
8/ I know for a fact that VCs wrote checks blindly. Why? Because revenues were strong. Were they sustainable? Were they bleeding out money the other side? Was it all predicated on an untenable self-dealing setup, frontrunning clients, misappropriation of user funds? Never asked.
— Jesse Powell (@jespow) November 10, 2022
Powell listed nine red flags about FTX that should have been noticed by the venture capital firms.
FTX acting like it understood everything after showing up to the battle eight years late, spending nine figures on “ego” purchases like buying political influence, making sports deals, and FTT are among these red flags.
Lawmakers take their fair share
Finally, Powell drew attention to the U.S. lawmakers to say that they had some accountability in the FTX crash as well.
He said that they refused to provide a “workable regime under which these services could be offered in a supervised manner.”
According to Powell, this pushed businesses like FTX to off-shore lands which brought things to what they are today.
Powell said that lawmakers should focus on off-shore exchanges, instead of “wrongfully focusing on convenient, on-shore good actors”, as they do currently.
Kraken remains safe
Powell finished his words by assuring the community that Kraken wasn’t exposed to FTX or FTT. He said that Kraken prioritized survival above profit and shared his best wishes to the ones who are affected by the recent turn of events.
He said:
“Thankfully, @krakenfx wasn’t exposed to any of the resent disasters. While we aim to give our clients access to bleeding-edge crypto products, we take a very conservative approach to our business operations, security and financial resiliency. Survival & mission above profit.”
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Author 
Zeynep Geylan
Zeynep is an academic who turned to crypto in 2018. Originating in social sciences, she is especially interested in the social impact of blockchain and cryptocurrencies and strongly believes in their transmuting power.
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FTX Token
$2.93549
FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
Kraken
Kraken is a San Francisco-based digital asset exchange in euro volume and liquidity that trades various currencies, including Canadian dollars, US dollars, British pounds, and Japanese yen.
Jesse Powell is an expert in virtual currencies, online/international payments and fraud, as well as co-founder and former CEO of Kraken, one of the most trusted and largest Bitcoin exchanges in the world with number one EUR market share.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.