Ken Griffin on FTX: “One of the absolute parodies” for the financial markets

Billionaire investor Ken Griffin, founder and CEO of multinational hedge fund Citadel, has warned that the collapse of cryptocurrency exchange FTX could weaken confidence in financial markets generally and hurt young investors’ ability to save for their retirement.

“FTX is one of those absolute parodies in the history of financial markets,” Griffin said during a keynote address at the Bloomberg New Economy Forum in Singapore. “People are going to lose billions of dollars, and that undermines confidence in all financial markets,” he added.

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Sam Bankman-Fried, Founder and Managing Director of FTX Cryptocurrency Derivatives Exchange, speaks at the Institute of International Finance (IIF) Annual Members Meeting in Washington, DC, U.S., Thursday, October 13, 2022. The con of this year (Ting Shen/Bloomberg via Getty Images/Getty Images)

His remarks come less than a week after the implosion of FTX, which at its peak was the third-largest cryptocurrency exchange. The company’s bankruptcy could affect a million creditors and comes amid reports of at least $1 billion in customer funds missing.

Griffin expressed concern that the losses suffered by young investors who lost money to FTX could make them less likely to invest their savings in capital markets, including traditional instruments like stocks and bonds.

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Representations of cryptocurrencies are seen in front of the displayed FTX logo and descending stock chart in this illustration taken November 10, 2022. (Reuters/Dado Ruvic/Illustration/File Photo/Reuters Photos)

“The confidence, however, of a generation in the financial markets has also been shaken. It’s really awful because young people in their 20s to 40s who are so committed to crypto – they have to save for their retirement, and s “they don’t believe or trust the financial markets, that’s a huge problem. They need to hold equity, they need to hold corporate debt, they need to participate in our global capital markets,” Griffin said. .

FTX’s failure has led to calls for greater scrutiny of cryptocurrency markets from lawmakers in both houses of Congress and Treasury Secretary Janet Yellen.

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Griffin said US regulators need to agree on a format for regulating crypto markets to restore some confidence among investors: “The turf war waged by US regulators must end. absurd that, without naming the agencies, they are all dancing around who owns what.”

“The bottom line is that American investors have really been hurt here by the hundreds of billions of dollars in crypto market cap declines over the last two years. I mean that really hits the very essence of what investor protection is about,” Griffin said.