Larry Summers thinks the FTX meltdown is more akin to the collapse of Enron and says there are 2 regulatory lessons to be learned

According to Larry Summers, the downfall of FTX is similar to the demise of Enron.

The decline of the world's second largest digital currency exchange was caused by early warning signs of fraud, according to a former Treasury Secretary.

FTX lent its name to stadiums and a "vast explosion of wealth that nobody understands where it comes from" as reasons to support the comparison.

Financial regulators were deceived by the company's artificial holdings that helped it hide huge levels of debt. Special purpose entities were put in place to protect the company from financial risks.

The company's share price went from a peak of $90.75 to $0.26 by the time it filed for Chapter 11.

In the wake of FTX's collapse, Summers listed two important things for regulators to do in the future.

"I think it would help us detect what was going on in countries and in companies if we had fewer economists and quants," he said. The field of forensic accounting is important to me.

Everyone who has anything to do with a position of responsibility has to be completely away from the office, away from their phone, away from any device and connection to the system for a week or two annually. He said that the protocols would help cause some of the problems to come to light.