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Our Opinion

Our Opinion: A crypto empire falls hard, with reverberations in our Berkshire backyard

Salame stands outside of Firefly Gastropub

Ryan Salame stands last fall outside Firefly Gastropub, one of the restaurants he purchased in Lenox.

It’s a financial train-wreck reminiscent of Enron, and the world can’t look away. The stunning downfall of cryptocurrency exchange FTX — and its founder, crypto wunderkind turned international disgrace Sam Bankman-Fried — has produced shockwaves that will continue to shake the financial world for the foreseeable future. A company valued at $32 billion earlier this year has rapidly collapsed, and could take countless investors with it. Mr. Bankman-Fried is under investigation by the Securities and Exchange Commission. FTX has filed for bankruptcy, with recent filings suggesting it could have as many as 1 million creditors. Regulators seem poised for a crypto reckoning that, based on this fiasco, probably should have come much sooner.

Yet in the heart of the Berkshires, there are some smaller questions that hit closer to home. Questions like, What does this entail for downtown Lenox? That might sound like a myopic view, but it’s a matter of legitimate local concern. After all, the man who owns half the restaurants in downtown Lenox, Ryan Salame, assisted Mr. Bankman-Fried with the founding and creation of FTX and has been the co-CEO of its subsidiary FTX Digital Markets since last year.

While Mr. Bankman-Fried is currently under investigation, there’s no indication that Mr. Salame is. Further, Mr. Salame has not been implicated in the alleged shady dealings between FTX and Alameda Research, a trading firm owned by Mr. Bankman-Fried, which has contributed to FTX’s liquidity issues and drawn regulators’ (overdue) attention.

People close to Mr. Salame, who owns a home in Sandisfield, told The Wall Street Journal that he “became physically sick” after learning of FTX’s problems early last week. Those same sources, among more than a dozen current and former FTX employees who spoke to the Journal, also said Mr. Salame was not part of Mr. Bankman-Fried’s inner circle at FTX.

Still, the resultant implosion that tanked FTX might have a similar effect on Mr. Salame’s personal financial picture as it has on Mr. Bankman-Fried’s. Of the myriad questions about economic stability FTX’s collapse raises, one directly pertains to the health of the dining sector in this small Berkshire town heavily dependent on tourism.

Under the collective branding Lenox Eats, Mr. Salame owns seven separate businesses, though only some are currently in operation while others are still yet to develop or open. That’s a precarious time for the restaurateur behind half the eateries in Lenox to face such financial calamity.

“I feel really badly for Ryan and yes, I am concerned about what it means for Lenox. I know Heritage and Firefly are continuing to operate as normal. Everything else is on hold until further notice,” Lenox Chamber of Commerce Executive Director Jennifer Nacht told The Eagle last week. “It’s so crazy that something of this global magnitude has such a direct effect on our little town.”

We share the surrealism of Ms. Nacht’s sentiment as well as her concerns for the future of an entire downtown. As will be the case with the bigger hanging questions about FTX’s phenomenal failure, what it entails for Lenox likely will be a slow-drip reveal as more details inevitably emerge. Both Mr. Salame and his local manager for his Lenox Eats restaurants and related businesses have been tight-lipped amid the FTX fallout.

At the risk of being overly optimistic, there hopefully will be lessons here for self-styled crypto tycoons and financial regulators alike. The paradox that the spectacular meltdown of an unregulated currency trading exchange suddenly demands scrutiny and regulation was not missed by us or by others. Letting huge, unregulated markets run amok is never a good game plan, and there’s no exception for relatively nascent developments like cryptocurrency. Seeing the big players in those markets suddenly flood the zone with political donations is probably a bad sign, too. And we should probably be careful in prematurely labeling quick-rise figures like Mr. Bankman-Fried “The Next Warren Buffett,” especially those who ought to know better like the editors at Fortune magazine.

Those lessons are landing hard around the country, from D.C. to Wall Street to FTX’s compound in the Bahamas. Hopefully they don’t land too hard here in our Berkshire backyard, but we’ll be watching closely in downtown Lenox to see if that’s the case.

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