Three banks with close ties to the crypto industry, Silvergate, Silicon Valley and Signature, have gone under within the last week. Forbes’ Director of Research for Digital Assets Steven Ehrlich joins ‘Forbes Newsroom’ to discuss what this means for the industry, who is at fault and if 2022’s FTX fallout was the catalyst.

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In the wake of the recent wave of bank failures in the United States, many have speculated as to the cause. One theory that has gained traction in certain circles is that fallout from FTX, a popular cryptocurrency trading platform, may have played a role.

FTX is a cryptocurrency exchange that allows users to buy and sell a wide range of digital assets. The platform has gained a reputation for being particularly user-friendly and has experienced a surge in popularity over the past year or so.

However, many experts have warned that the platform may be contributing to a dangerous trend of financial instability. Specifically, they point to the practice of margin trading, which allows users to borrow funds to make trades at much higher volumes than they would otherwise be able to.

Proponents of FTX argue that margin trading is a valuable tool for experienced traders to maximize their profits. However, critics argue that it can also be incredibly risky, especially for those who are new to the world of cryptocurrency.

Some have noted that the recent bank failures could be seen as a symptom of this larger trend. Specifically, they point to the fact that many of the banks that failed were heavily invested in risky assets, including cryptocurrencies. This has led some to speculate that these banks may have been attempting to keep up with the high-risk, high-reward mentality that permeates the world of cryptocurrency trading.

Of course, it is impossible to say for certain whether or not FTX had a direct role in any of the recent bank failures. There are many complex factors that contribute to financial instability, and it is likely that the truth is more nuanced than any one theory can explain.

However, the rise of platforms like FTX has certainly prompted important conversations about the nature of modern finance. As the world becomes more interconnected and technology continues to evolve at a rapid pace, it is clear that we must think critically about how we approach financial risk and stability.

For now, it remains to be seen what the ultimate fallout of FTX and other similar platforms will be. But one thing is clear: we cannot afford to ignore the potential risks they pose to our financial system. Only through careful examination and thoughtful regulation can we hope to navigate these tumultuous times and create a more stable future for all.