On November 11th, FTX, a Bahamas-based cryptocurrency exchange platform worth an estimated $32 billion, filed for Chapter 11 bankruptcy protection in the United States. In its filing, FTX stated that it had more than 100,000 creditors and $50 billion in liabilities.

Following this, its CEO Sam Bankman-Fried stepped down from his position. Bankman-Fried is under investigation by the Securities and Exchange Commission and the Department of Justice for allegedly using customer deposits in FTX to fund Alameda Research, a trading firm of which the entrepreneur owned 90 percent.

Investors are panicking after once again falling victim to a familiar scandal: high-earning CEOs, claiming to have solutions up their sleeves, conceal massive debts while lying to investors financing the company. FTX’s bankruptcy has impacted not only the 130 companies affiliated with it, but also the entire cryptocurrency market. Ethereum and Bitcoin, two popular cryptocurrencies, have plummeted in value alongside FTX’s coin, FTT.

Perhaps it’s time to evaluate cryptocurrency as a whole. Is cryptocurrency going to be the next big thing? Frankly, the answer is no. Cryptocurrency is far from being the solution in finance; indeed, digital currencies are fundamentally flawed.

“Digital currency” as a name is misleading. Cryptocurrency isn’t on pace to be like the dollar or the euro. Cryptocurrency isn’t even technically a currency. Under the Commodity Exchange Act, digital currency such as Ethereum, Bitcoin, or FTT is classified as a commodity. Crypto is also too awkward to use in everyday exchanges. Its value fluctuates, so it is difficult to make an exchange between crypto and items being purchased. Cryptocurrency has instead become much more like a stock, a replacement for fiat currency. It’s hard to imagine buying a teddy bear with Lockheed Martin stock, isn’t it? The same logic applies to crypto.

One main attraction of cryptocurrency is also its biggest drawback: lack of oversight. Cryptocurrency advertises that it can be safer than a traditional bank, because it doesn’t require a customer to trust a third party to hold their money. However, this is exactly what a cryptocurrency exchange platform does. An individual gives these exchange platforms money in return for digital tokens under their account. Simply put, cryptocurrency advertises itself as a solution to a problem that it perpetuates.

Cryptocurrency exchanges promote that there is no government oversight. However, that’s exactly what is needed for these platforms to work. There needs to be more transparency and supervision. Banks are under government supervision to make sure that they create a steady exchange of money. As for crypto, there is no government assurance. All that individuals have to go on to determine whether buying crypto is a good decision is to assess how legitimate they believe a certain crypto exchange to be.

Many investors in FTX believed in Bankman-Fried’s vision. Temasek, a Singapore state holding company, and Sequoia, a venture capital firm based in the United States, invested a whopping $210 million each into FTX. Now, both these companies are logging a $0 return into their finance books. Even everyday people such as Terri Smith, an architect based in the Seattle area, said that she lost all $30,000 of her money invested into FTX. There is quite a scale from individual investors trying to take a stab at finance to billion-dollar companies with years of investing experience and algorithmic work — all fooled by a bright-eyed CEO with a supposed vision to change finance for everyone.

FTX’s collapse has set a prime example of where the cryptocurrency market could be headed: to an unsupervised market with no government oversight filled with inexperienced CEOs having radical ideas of changing the finance industry, but not changing much at all. This sounds a lot like Theranos, and we know what happened in the case of Elizabeth Holmes’ broken promises. Finance at its core is the business of fair exchange, and frankly, cryptocurrency is far from that. Cryptocurrency isn’t even technically a currency. Under the Commodity Exchange Act, digital currency such as Ethereum, Bitcoin, or FTT is classified as a commodity. Crypto is also too awkward to use in everyday exchanges. Its value fluctuates, so it is difficult to make an exchange between crypto and items being purchased. Cryptocurrency has instead become much more like a stock, a replacement for fiat currency. It’s hard to imagine buying a teddy bear with Lockheed Martin stock, isn’t it? The same logic applies to crypto.

One main attraction of cryptocurrency is also its biggest drawback: lack of oversight. Cryptocurrency advertises that it can be safer than a traditional bank, because it doesn’t require a customer to trust a third party to hold their money. However, this is exactly what a cryptocurrency exchange platform does. An individual gives these exchange platforms money in return for digital tokens under their account. Simply put, cryptocurrency advertises itself as a solution to a problem that it perpetuates.

Cryptocurrency exchanges promote that there is no government oversight. However, that’s exactly what is needed for these platforms to work. There needs to be more transparency and supervision. Banks are under government supervision to make sure that they create a steady exchange of money. As for crypto, there is no government assurance. All that individuals have to go on to determine whether buying crypto is a good decision is to assess how legitimate they believe a certain crypto exchange to be.

Many investors in FTX believed in Bankman-Fried’s vision. Temasek, a Singapore state holding company, and Sequoia, a venture capital firm based in the United States, invested a whopping $210 million each into FTX. Now, both these companies are logging a $0 return into their finance books. Even everyday people such as Terri Smith, an architect based in the Seattle area, said that she lost all $30,000 of her money invested into FTX. There is quite a scale from individual investors trying to take a stab at finance to billion-dollar companies with years of investing experience and algorithmic work — all fooled by a bright-eyed CEO with a supposed vision to change finance for everyone.

FTX’s collapse has set a prime example of where the cryptocurrency market could be headed: to an unsupervised market with no government oversight filled with inexperienced CEOs having radical ideas of changing the finance industry, but not changing much at all. This sounds a lot like Theranos, and we know what happened in the case of Elizabeth Holmes’ broken promises. Finance at its core is the business of fair exchange, and frankly, cryptocurrency is far from that.