Larry Summers, the “American economist who served as the 71st United States secretary of the treasury from 1999 to 2001,” says that the high-profile collapse of crypto exchange FTX is comparable to the Enron scandal of the early 2000’s.
Speaking in an interview with Bloomberg, Summers argued that while many were comparing FTX’s bankruptcy to that of banking giant Lehman Brothers in 2008, the situation was more akin to Enron.
Enron, an energy, commodities and services company, was a Wall Street darling for years until it was revealed that the company’s accounting and profits were largely the result of fraud. Summers pointed to similar evidence of “financial scandals,” in the collapse of FTX.
As reported by The Daily Hodl, Summers said FTX’s bankruptcy was the result of “some very basic financial principles that go back to financial scandals that took place in ancient Rome.”
Summers continued, drawing more parallels between Enron and FTX, including having a sports stadium named after the company early in its history and a “vast explosion of wealth that nobody quite understands where it comes from.”
The former U.S. Treasury Secretary said FTX has provided several lessons for the regulatory agencies to draw from, including the need for more forensic accountants in order to better investigate companies around the world.
Summers also argued that everyone who plays a significant role in a finance company should be required to spend a week away from the office and disconnected from their phone at least once per year. The famed economist said enforcing that latter would be “very helpful,” in causing issues like FTX’s bankruptcy to come to light sooner.
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