With blockchain technology still under development in a number of industries for a variety of uses, FinTech Network, in partnership with Melonport, have revealed how smart contracts could avert financial disasters, including some that made headlines in recent years. ‘Hedge Fund Scandals & How Smart Contracts Could Help Prevent Them’ focusses on two particular examples and examines how smart contracts could have prevented the loss of millions of dollars.
The whitepaper reveals how smart contract based asset management protocols, running on top of blockchain technologies, could mitigate the damage caused or even prevent the underlying issues from arising in similar cases in the future.
In the paper, one of the examples examined is the background of Bernie Madoff’s Ponzi scheme and how smart contracts could have helped avoid this situation, with a particular focus on conflict of interest, auditability, transparency and disappearing funds.
Also under scrutiny is the fall of Bear Stearns and Lehman Brothers, with an analysis of how smart contracts could now be relied upon to prevent excessive leverage and a similar scenario from occurring again.