Billionaire investor Ken Griffin, the founder and CEO of multinational hedge fund Citadel, warned that the collapse of cryptocurrency exchange FTX could weaken confidence in financial markets at large and hurt the ability of younger investors to save for retirement.
Ken Griffin told Fox Business, “FTX is one of these absolute travesties in the history of financial markets.”
His remarks come less than a week after the implosion of FTX, which at its peak was the third-largest cryptocurrency exchange.
The firm’s bankruptcy may affect up to 1 million creditors and comes amid reports that at least $1 billion in client funds disappeared.
The Wall Street Journal is now reporting that ex-CEO Sam Bankman-Fried cashed out $300 million during a $420 million raise from several investors last year for personal use.
Sam Bankman-Fried is now facing a class-action lawsuit that was filed on November 11th, 2022.
Celebrities named in the lawsuit include Steph Curry, Shaquille O’Neal, Shohei Ohtani, Naomi Osaka, Larry David, and Kevin O’Leary who allegedly helped Bankman-Fried promote the exchange.
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Citadel’s Ken Griffin Says Retail Investors May Likely Ditch the Markets
Griffin expressed concern that losses sustained by younger investors who lost money due to FTX may make them less likely to invest their savings in capital markets, including traditional instruments like stocks and bonds.
“The confidence, though, of a generation in financial markets has also been shaken. That’s really awful because the 20-some-year-olds to 40-year-olds who are so engaged in crypto — they’ve got to save for their retirement, and if they don’t believe or trust in financial markets, this is a huge problem. They need to own stocks, they need to own corporate debt, they need to partake in our global capital markets,” Griffin said.
Citadel is currently partnering with Virtu, Schwab, Paradigm, Sequoia, and other Wall Street giants to form EDXM Crypto Exchange.
A cryptocurrency exchange that is supposed to provide transparency and lower transaction costs through the use of high liquidity and tight spreads.
But concerns are growing within the retail investor community as Citadel enters the crypto space, calling it an outrage due to the hedge funds’ long history of abuse of power.
“The bottom line is American investors have really gotten hurt here to the tune of hundreds of billions of dollars in decline in market cap in crypto over the last two years. I mean that really strikes at the entire core essence of what investor protection is all about,” Griffin said.
Source: Fox Business.
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