The suicide of a 20-year-old trader active on Robinhood should be a wake-up call for cryptocurrency exchanges that put revenue above customer protection, said a US executive.
The world of exchanges without guarantees for inexperienced traders
Many exchanges have been designed to encourage users to trade as frequently as possible, often with money they don't have, and look more like casinos than responsible trading platforms, said bitFlyer US chief operating officer Joel Edgerton.
Edgerton spoke just over a week after a 20-year-old student, Alexander Kearns, killed himself after mistakenly believing he was in debt for more than $ 700.000 by trading complex option contracts on Robinhood - an app based on a trading platform with a young and detail-oriented following.
It subsequently emerged that the negative balance was a temporary phase in the execution of the contract, i.e. that Kearns was not actually in the red. But Robinhood has been the subject of heavy criticism for allowing amateur traders to access such complex instruments without guarantees that would help them avoid confusion and, in this case, tragedies.
Late last week, Robinhood announced a $ 250.000 donation to the American Foundation for Suicide Prevention and promised to add guarantees to its platform, such as strengthening eligibility requirements for complex option negotiations.
A responsibility task often avoided by exchanges
Binance CEO Changpeng "CZ" Zhao said last week that his exchange has already implemented a "Responsible Trading" feature. Edgerton, the former head of operations at the insurance arm of the French bank BNP Paribas, said the exchange was trying to shield further criticism.
“I would say that CZ's response was mercenary. He's using a boy's death to present his company when Binance is actually part of the problem, "he explained. The platform attracts users and their anti-addiction policy "underlines the fact that they built the product to create addiction," he said.
Any cryptocurrency exchanges that indiscriminately offered 125x leverage - which Binance started offering in October - are not serious about customer protection, Edgerton continued.
BitFlyer, which opened an office in the United States in 2017, claims to already limit access to leverage and to be able to report or even prevent access to users who show problematic trading patterns.
Arthur Hayes, BitMEX CEO, previously defended his business, arguing that in a free market customers can always move to other platforms if they fear being exploited or defrauded.
Cryptocurrency exchanges like Bitcoin Revolution they have an important role to play in customer protection, Edgerton said. Robinhood suicide "is what happens when companies focus on technology and profits rather than doing the right thing for their customers."
