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FTX, SBF, Alameda Research disaster

$15 Billion to $0

If somehow you haven't heard the news about Sam Bankman-Fried (SBF), he was the Founder of the 2nd largest crypto exchange (FTX) that has had a complete collapse.  It appears that he may have co-mingled customer deposits to the point where all the value on the books was in his own crypto token FTT.  When news caught wind that he his competitor and  CEO of the largest crypto exchange, Binance, Changpeng Zhao (CZ) was going to sell his tokens, the price for FTT token collapse exposing that FTX co-mingled funds and couldn't meet customer withdrawals.  Currrently, the exchange is halted and users are waiting to see if they'll be able to get the crypto they deposited at the exchange.

Possible Contagion

Even if you didn't have any money or investments with FTX you still may be impacted.  For example, BlockFi was bailed out by them and now have frozen accounts.  Gemini, the only other major licensed crypto exchange in New York (besides Coinbase) as been affected.  Not Gemini directly, but through their offered services of staking partner Genesis.  This is unfortunate for many users and even affected me.  I barely have any crypto, but I was started to use the Gemini credit card (which offered 3% reward) and was staking my rewards with Genesis through Gemini.  So I'm not sure if I'm ever going to get those credit card rewards (as such, I've also stopped using the Gemini Credit Card, and I can imagine many other users will do the same).

Going Forward -> self custody or products without custody risk

Going forward whether you still have faith in crypto or not, until there is more clarity security of deposits (unlike traditional banks that have FDIC or stock accounts that have SIPIC), I would imagine the prudent thing to do is self custody your crypto on a hardware wallet.  And if you don't feel comfortable doing that, then look to gain exposure to crypto through non-direct methods, like BITO ETF that invests in rolling  futures, or trade futures yourself or potentially invest in related companies like Coinbase (COIN) or miners like RIOT or MARA.  As for sizing of crypto, just keep in mind that the volatility is about 5x that of stocks and it is still an extremely risky investment that could go to 0.
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