Do big whale orgs owe a duty of care to small fry investors?

November 27, 2022

The one question that I get regularly asked since FTX went into bankruptcy is this – how did I know FTX was fake? Let me fully disclose. I did NOT know it was a badly managed company. Infact I had absolutely no idea that FTX was even going to crash and burn as it did. Why should I? Especially against a backdrop of blue chip investors that FTX had managed to garner, Sequoia Capital, BlackRock, Tiger Global, SoftBank, Temasek and even the Ontario Teachers Pensions fund. I remember saying to myself – ‘Hey! You are just a dumbass farmer! do you mean to say, you are more financially clairvoyant than the due diligence team of these firms?’ So to be honest with you. I was seriously thinking abt using FTX as an exchange. But, I never got around to it and one reason for this was because I was busy obsessing about why SBF had such a lousy ranking in the online game league of legends. I had big difficulties understanding how a gamer who played this game for three years straight was still stuck in the mud in Bronze III… cut a long story short. I never got around to using FTX as an exchange. I think from this episode we can draw the lesson that big investment outfits owe the small investor a duty of care that they don’t inadvertently endorse or render kosher risky investments.

Because whether whale investment outfits realise it or not (they should). By virtue of their legacy, prestige and sheer size, they can often sway markets along with modulate market sentiments. Like Spiderman said, ‘with power comes responsibility.’ Alternatively just hang a big red disclaimer like ‘Danger! Folk who like to live dangerously juggling hand grenades here!’

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