Is the FTX saga a 'canary in a coal mine'?

Sam Bankman-Fried has been arrested and FTX (the crypto exchange he founded and ran) is no longer.

But is the FTX story just the tip of a very large, very scary iceberg?

Since 2008 the banking industry is far better regulated that it was before, but the risky trading behaviour that led to the '2008 financial crisis' didn't magically disappear overnight. It migrated away from regulated trading environments into brand new marketplaces that are less regulated (like the crypto market) and others.

As interest rates rise around the world, these risky positions in unregulated trading marketplaces are being increasingly squeezed.

What risks do they carry? - nobody really knows for sure, but the fall of FTX could just be the so-called 'canary in the coal mine' indicating far more systemic financial issues are on the way.

This is the sentiment expressed by Mohamed El-Erian, Chief Economic Advisor at Allianz, in a recent podcast interview with Ezra Klein.

Decades of very low interest rates have had some significant unexpected consequences and have encouraged trading behaviours that are as yet to fully reveal themselves. Blindspots have developed, significant cognitive dissonance has become entrenched in a generation of finance professionals who were operating under the flawed assumption that interest rates would stay low forever.  

FTX might in time, come to symbolise just the start of the trouble we now face.