Opinion: Why Jesse Powell’s ‘On-Shore’ vs ‘Offshore’ View Is Wrong
The recent collapse of FTX, one of the largest crypto exchanges in the world, has sparked a heated debate among industry leaders and regulators. FTX filed for bankruptcy after a failed deal with Binance, its main competitor and former partner. The fallout has caused massive losses for investors and traders, as well as damage to the reputation and trust of the crypto industry.
One of the most vocal critics of FTX is Jesse Powell, the co-founder and departing CEO of Kraken, another major US-based crypto exchange. Powell has pointed out several “red flags” that he saw in FTX’s business model, such as its lack of transparency, compliance and security. He also claimed that FTX was operating as an “offshore” exchange, meaning that it was not subject to US laws and regulations.
However, not everyone agrees with Powell’s view. In fact, some argue that his distinction between “on-shore” and “offshore” exchanges is overly narrow-minded, self-centered, misses the broader picture and unhelpful to the development of our industry.
For instance, one could argue that from an “on-shore” perspective, FTX was actually an “on-shore” exchange. After all, its CEO Sam Bankman-Fried (SBF) and most of its key executives are Americans. They have spent a considerable amount of their time and efforts lobbying in the US Congress and regulators for more clarity and support for crypto innovation. They have also donated millions of dollars to various political causes and charities in the US. This did not stop fraud from being committed by some rogue employees who allegedly manipulated FTX’s internal systems to siphon funds.
Moreover, drawing a distinction between “on-shore” and everyone else is self-centered and somewhat arrogant. Everyone is “on-shore” from their own perspective. For example, Binance is based in Malta but has users from all over the world. Does that make it an “offshore” exchange? What about Coinbase or Gemini? Are they “on-shore” because they are registered in the US? Or are they “offshore” because they have global operations?
The reality is that blockchain has no borders. Crypto is a global phenomenon that transcends national boundaries and jurisdictions. There are good (and bad) people everywhere. Embracing diversity and openness will lead to a better outcome for everyone involved. Any over-generalization (especially against others) is counter-productive and negative.
I do respect Jesse Powell for what he has done for the crypto industry and always speaking his mind. But on this one, I have to point it out: his view is wrong — hopefully for his benefit — I apologize for saying it so directly — no harm meant.
Let’s guard against divisive rhetoric and work together to build a better world with crypto.
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