Ken Griffin on FTX: 'One of the absolute travesties' for financial markets
Citadel CEO Ken Griffin warns the failure of FTX may have shaken the confidence of younger generations in financial markets.
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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.
"FTX is one of these absolute travesties in the history of financial markets," Griffin said in remarks at the Bloomberg New Economy Forum in Singapore. "People are going to lose billions of dollars, and that undermines trust in all financial markets," he added.
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Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Thursday, Oct. 13, 2022. This year's con (Ting Shen/Bloomberg via Getty Images / Getty Images)
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 a million creditors and comes amid reports that at least $1 billion in client funds disappeared.
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.
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Representations of cryptocurrencies are seen in front of displayed FTX logo and decreasing stock graph in this illustration taken Nov. 10, 2022. (Reuters/Dado Ruvic/Illustration/File Photo / Reuters Photos)
"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.
The failure of FTX has led to calls for greater oversight of cryptocurrency markets from lawmakers in both chambers of Congress and Treasury Secretary Janet Yellen.
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Griffin said U.S. regulators need to settle on a format for regulating crypto markets to restore some confidence among investors: "The turf war by American regulators has got to end. It's just preposterous that, without naming the agencies, they all dance around who owns what."
"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.