- Prominent DeFi dev Andre Cronje reviewed the bankruptcy of failed crypto firms.
- Cronje dubs the executives of these bankrupted firms as the actors in the crypto space.
- He said imposing strict regulation upon these actors is the answer to protect consumers.
Andre Cronje, a former DeFi developer, slams those who manage the bankrupted crypto firms and calls for strict regulation, emphasizing that the current regulatory regime was ‘ineffective’.
In his published article, Cronje blamed the two trillion losses in the crypto market on the flaws in the system and the failure to regulate the irresponsible executives. He pointed out that the problem began with the unsecured crypto regulations, particularly the locking of accounts handled by exchanges, or instances where users’ funds are left in the hands of others.
At the same time, the executive’s behavior of these failed fundings and exchanges, who took other’s people money at risk, has seen few to no consequences from their actions. He also claims that private ventures, such as hedge funds, are the main actors within the crypto-market.
The prominent ex-DeFi developer said crypto exchanges and investment service providers are like banks but without the “safeguards and regulation which banks are required to follow.” Cronje pointed out that irresponsible practices in these recent crashes, along with their effects, have the same underlying principle which led to the crash of the traditional financial market in 2008.
Cronje believes that the answer to protecting consumers from these firms is to apply comparative safeguards established by traditional finance. He also cited several solutions:
Namely: regulate the minimum reserves which may be held by any exchange, mandate that these service providers must be licensed, regulate risk exposure, apply standards of transparency, and include crypto-currency within the meaning of a financial product.
Furthermore, Cronje stated that imposing regulation on all actors in the crypto space will lay out much-needed protection to consumers and will facilitate long-term market stability.
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