The collapse of Sam Bankman-Fried’s FTX cryptocurrency empire was accelerated when the head of a rival exchange announced he was planning to dump holdings of something called FTT—a token created by FTX that afforded some perks to investors who owned it. At one point, the token was one of the 10 biggest coins in the market, which would have made it eligible for the Bitwise 10 Crypto Index Fund.
However, Bitwise never added FTT to the fund. Matt Hougan, chief investment officer of Bitwise Asset Management, joined the What Goes Up podcast to discuss the damage caused by the implosion of FTX and explained why the fund snubbed its coin. “We look at assets that are at undue risk of being found in violation of federal securities laws,” he said. “FTT fell into that framework because we thought it was likely, or possible, to be deemed a security by regulators. And it was largely internally controlled, in our view.”