It’s always interesting to see things get reversed. Typically, one often witnesses figures in the financial space – i.e. Warren Buffett, etc. – touting blockchain while believing that crypto is the money of criminals and do-nothings. Nic Carter, on the other hand, believes the exact opposite.
Carter Is Pro Crypto, Not Blockchain
As the founder of Castle Island Ventures – a venture capital firm – Carter explained in an interview that blockchain is consistently touted as the eight wonder of the world, though he doesn’t believe it will change society in the ways that people are suggesting.
Cryptocurrency, on the other hand, is a revolutionary tool in his mind, and he thinks it’s got a big future ahead of it, though he admits its reputation has become stained due to severe cases of fraud.
One such case involves Quadriga CX, the ill-fated cryptocurrency exchange in Canada. Its CEO Gerald Cotten allegedly died while in India from Crohn’s disease, but Cotten is potentially the only person who had the private keys necessary to access users’ crypto funds. When he died, the access to these funds died with him. Customers have been trying to get their money back and they can’t seem to do it.
As a result, a class-action lawsuit has come about, and the company has garnered a reputation for fraud and embezzlement. Carter comments:
Cotten was such a good case study. What people thought was the case was not the case as it was reported. I was super skeptical of the original story – that this guy just lost some keys. He basically operated a Ponzi exchange. It’s really a story about fractional reserve banking and how everything goes wrong when people think an exchange doesn’t have appropriate reserves. At that point, there’s going to be a run on the bank.
Exchanges Should Tell People How Much Money They Have
Carter suggests that exchanges be treated the way the Securities and Exchange Commission (SEC) treats companies that offer or sell securities. He says that exchanges should be required to publish regular or periodic reports showing what their reserves and how their money is being used. He states:
I really agitate for proofs of reserve. Exchanges should publish period attestations that they have X amount. Quadriga should be a catalyst for this… It was nothing to do with the security of bitcoin or custody. It collapsed because this guy was a fraudster. For whatever reason, people don’t demand proofs of the actual solvency – at least with the vigor they might question banks.
He also mentions that people shouldn’t take this as a sign that all exchanges behave incorrectly. He’s confident many of the world’s top exchanges have the reserves necessary to ensure customers are reimbursed if problems arise, though the public should be made privy to this kind of information as a means of keeping everyone calm and safe.