Georgia cryptocurrency players assess the fallout of FTX implosion

Businesses say more regulation needed after FTX collapse, indictment of co-founder, but doubt fallout will kill industry
March 30, 2022 College Park - Jason Sanders, general manager, opens up one of units at Cleanspark Bitcoin Mining Facility in College Park on Wednesday, March 30, 2022. (Hyosub Shin /


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March 30, 2022 College Park - Jason Sanders, general manager, opens up one of units at Cleanspark Bitcoin Mining Facility in College Park on Wednesday, March 30, 2022. (Hyosub Shin /



John Marion hardly knew what cryptocurrency was a year ago.

Marion, a 61-year-old real estate investor and associate broker in Canton, first heard about the digital currency during an investment conference presentation last December. He invested $3,000 and waited, curious. But instead of making money, he lost more than half of what he put in, he said.

The last straw was when Sam Bankman-Fried, co-founder of the popular cryptocurrency exchange company FTX, was arrested this month on an eight-count indictment alleging FTX was a massive fraud. Marion cut his losses.

“I was just hoping that it would have been a good gamble,” he said. “I guess it wasn’t.”

The FTX fraud triggered calls for new regulations to reign in crypto abuses. In Georgia, where the crypto industry is growing, some insiders acknowledge tighter controls are coming — but they hope regulation won’t stifle the industry.

Many Americans were already disappointed in cryptocurrency before prices tanked this year and several high-profile companies failed. A Pew Research poll in July found that at the time, about one-in-six Americans had invested in or traded cryptocurrency. But nearly half of those investors say that results were worse than expected.

Bankman-Fried’s downfall hit crypto confidence even harder. Cryptocurrency investors big and small have already pulled out billions of dollars. The cryptocurrency market, which floundered when FTX declared bankruptcy in November, continues to contend with wild price swings and lower values.

One bitcoin, a unit of the world’s most popular cryptocurrency, was worth nearly $50,000 in January. As of Friday, one bitcoin was worth less than $17,000. Other cryptocurrencies have seen similar drops, with Ether and Binance Coin both shedding more than half their value since January.

Still, many of Georgia’s ever-growing cryptocurrency businesses and miners see opportunity in the fallout.

“It’s a wildly positive event in the long term,” said S. Matthew Schultz, executive chairman of CleanSpark.

CleanSpark is a Nevada-based Bitcoin mining company with four mining facilities in Georgia. Bitcoin has advantages that other cryptocurrencies may not, Schultz said. It’s decentralized, meaning that it isn’t controlled by one party. Every transaction is also publicly recorded and observable in the blockchain code, discouraging fraud, he said.

Meanwhile, FTX was centralized, controlling cryptocurrencies like FTT.

Bankman-Fried’s fall is part of cutting out the “confusion and clutter” of cryptocurrency, Schultz said. He hopes it will highlight the benefits of Bitcoin to consumers and investors.

“I was at a conference, and somebody compared the FTT token to the briefcase full of IOUs on the movie ‘Dumb and Dumber,’” Schultz said. “It’s a massive win to get rid of people like [Bankman-Fried].”

In October 2021, the Department of Justice announced its National Cryptocurrency Enforcement Team, which investigates criminal cryptocurrency use. Then in February, the department reported that the founders of BitMEX, a cryptocurrency exchange platform, would pay $20 million for purposefully avoiding to establish an anti-money laundering program. Two days later, cryptocurrency lending company BlockFi agreed to pay $100 million in penalties after the Securities and Exchange Commission charged the platform with falling to register offers and sales.

Other companies have filed for bankruptcy, unable to handle market pressure. Cryptocurrency hedge fund Three Arrows Capital fell in June after two cryptocurrencies, Luna and TerraUSD, collapsed. A month later, cryptocurrency broker Voyager Digital filed for bankruptcy. So did cryptocurrency lender Celsius Network.

These events and more are part of a greater pattern of cryptocurrency culling, said Dan O’Prey, chief product officer of Bitcoin and crypto at Bakkt. Bakkt is an Alpharetta-based company that offers an app to manage digital assets like cryptocurrency — and it’s also one of the companies shaken by the fallout.

Bakkt shares were trading at $1.42 on Friday, down from a yearly high of $7.29 in February. The company reported a $1.5 billion net loss in the third quarter, and Intercontinental Exchange, which founded the company, recently wrote off $1.1 billion of its Bakkt holdings. Bakkt announced this month that it would lay off 15% of its employees.

Still, the market has a “short-term memory” and interest in cryptocurrency will return, O’Prey said. A Bakkt poll published on Dec. 13 — conducted before Bankman-Fried’s arrest but after FTX’s bankruptcy — found that only half of cryptocurrency users recalled any recent crypto market news. For the “crypto curious,” or people interested in trading, that figure fell to one-third.

“[Bankman-Fried’s fall] is a good opportunity for those entities that are well-run to step in, for the adults in the room to come and fill the gap,” O’Prey said.

‘Wild West’

What remains uncertain is how cryptocurrency regulations might unfold.

On Wednesday, U.S. Sen. Elizabeth Warren, D-Mass., introduced a bipartisan bill to reduce cryptocurrency crime. Among other things, the Digital Asset Anti-Money Laundering Act would allow the Financial Crimes Enforcement Network to designate cryptocurrency companies as “money service businesses,” putting them under Bank Secrecy Act regulations. It also cracks down on anonymity, prohibiting financial institutions from touching cryptocurrency that has been “mixed,” hiding transaction parties.



O’Prey said he welcomes “thoughtful” regulations for centralized cryptocurrency platforms. Schultz with CleanSpark argues that regulation is essential to Bitcoin’s growth, adding safety that will draw consumers. Part of this process may even include taxation, he said.

But not all crypto users support regulation.

Richard Clarke, an independent cryptocurrency consultant and organizer of the Bitcoin Atlanta Meetup, has participated in cryptocurrency mining and trading for 10 years. He was first drawn to the currency because of the freedom that comes from its detachment to traditional bodies like banks or government — but regulations would end that, he said.

“[Regulators] come in after the rampage, count the bodies, string someone up, say, ‘Oh, we got him!’ And then they expand their authority,” Clarke said. “All regulation really serves to do is to stifle competition.”

Robert Daniel, a financial tech adviser with the Georgia Institute of Technology’s Advanced Technology Development Center, understands regulation hesitancy. Certain kinds of crime like fraud have always been punishable, but other cryptocurrency activities remain in an undefined legal haze.

Good regulations are those that let assets flow as uninterrupted as possible while still protecting traders, Daniel said.

“It’s still been kind of the Wild West,” he said.

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