Sam Bankman-Fried found himself under fire this week after proposing regulation of decentralized finance (DeFi), including proposing to blacklist certain addresses. After several days of heated debate, the CEO of FTX revised his paper, but it still didn’t sit well.
Sam Bankman-Fried wants to regulate DeFi
Last week, Sam Bankman-Friedthe CEO of cryptocurrency exchange FTX, had published an almost 4,000-word document titled “Possible Industry Standards for Digital Assets”, a paper proposing solutions to better “regulate” decentralized finance (DeFi) .
In order to limit the number of intermediaries, to find a solution to censorship, and above all to find an interference with the centralization of banking power, an alternative has emerged under the name of decentralized finance. To find out more about this evolution which gives power to the user, read our fact sheet dedicated to the presentation of DeFi.
In this document, Sam Bankman-Fried appeared as a supporter of a regulation based on a system of block lists and blacklists, through which any sanctioned individual would no longer be able to carry out transactions in a so-called decentralized finance ecosystem.
In order to more or less balance its point, SBF specified that a system of lists could act as a brake on innovation, but that on the contrary, letting individuals do what they wanted without being sanctioned in return would lead to unleashing online financial crime. He supports his argument thus:
“Maintaining a blocklist strikes a good balance: it helps prohibit illegal transfers and freeze funds associated with financial crimes while allowing trade. Everyone should abide by OFAC’s sanctions lists (which, by the way, is already the law). »
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Words that sparked controversy
Unsurprisingly, SBF’s proposal to regularize decentralized finance, which is by definition supposed to be totally devoid of any authority, comes from anyone, received its fair share of criticism.
Many DeFi players, such as @scupytrooplesthe founder of Alchemix protocolspoke out against Sam Bankman-Fried’s proposal.
Minted fake tokens on ftx to game balancer farming
Expected sushi takeover
Listing perps on illiquid DeFi tokens to aid in their farm and dump effective altruism
Suspected of liquidation hunting
Lowball CeFi bids post crash
Lobbying against DeFi
Not a good look bro!
— scupytrooples.eth.lens (@scupytrooples) October 20, 2022
“Making fake tokens on FTX to play balancing act. Sushi takeover attempt. Listing of perpetual contracts on illiquid DeFi tokens to support them in their effective altruism [mode de vie auquel SBF a plusieurs fois dit s’identifier, NDLR] from farm and dump. Suspected of liquidation hunting. Cheap offers on the CeFi after the crash. Lobbying against DeFi. Not a very pretty sight, my brother! »
In the context of an interview with our colleagues from the media The Block, he drives the point home and indirectly calls SBF a parasite for the crypto ecosystem :
“I see them using the big business playbook, where they rise to the top, then get involved in lobbying to get the rules in their favor and so they can hurt the competition, and ultimately cement their position. He has publicly stated that he doesn’t care about crypto and is only in it for the money. It’s quite obvious to see that he’s not a good actor in this space. »
Same story for @sassal0xwell-known in the Ethereum (ETH) blockchain ecosystem, who posted a scathing message to his 225,000+ Twitter followers, about the CEO of FTX:
“SBF is and always will be a cancer in this ecosystem. Anyone who supports him and his cronies should be ashamed. »
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SBF says it is ready for dialogue
After many rather hectic debates on Twitter, Sam Bankman-Fried has wrote a long thread on Twitter in order to “ thank in particular those who had highlighted the heart of crypto, financial freedom “.
SBF explains that it has modified its initial document taking into account the various feedback of recent days, while specifying that the purpose of the maneuver was in no way to constrain developers operating in the DeFi sector, but simply to establish directives concerning the connection between this world and the various regulated platforms (like FTX).
He is pointing out that “ validators and smart contracts must be free, permissionless and decentralized “. However, the plea of the founder of FTX is far from having convinced everyone:
This is a subtle point u less you know what you’re reading: it should *never* be the case that there is a mandate to access DeFi through a centralized intermediary’s interface.
Devs should be allowed to build whatever interfaces they want https://t.co/pfgBifzTfO
— señor doggo 🏴🏴☠️ (@fubuloubu) October 23, 2022
“This is a subtle point, unless you know what you’re reading: there should *never* be a mandate to access DeFi through a centralized intermediary interface. Developers should be allowed to build the interfaces they want. […] If you don’t think it’s a big deal, do you want to do a KYC to use Etherscan? Because that’s exactly what he advocates. »
After a very mixed reception from the crypto community, it remains to be seen whether Sam Bankman-Fried’s regulatory wishes will see the light of day in the future, even simply if they are feasible.
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Source: Document by Sam Bankman-Fried
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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