STORY: “It is going to be something like a Lehman Brothers because FTX.com just didn’t have individual investors as their clients. They had other brokerage firms, hedge funds, trading shops, venture capitalists, institutional investors, and even crypto miners and crypto validators as customers that held funds with their brokerage operation. Other hedge funds, other brokerage firms that have money with them, their money is now gone or trapped in FTX," Bianco said.

Though he did not believe the knock on effects in the traditional financial space "should arise to the level of systemic problems."

FTX's downfall has prompted fresh calls to regulate the crypto-asset sector, which has seen losses stack up this year as cryptocurrency prices collapsed.

“Oh, it’s definitely going to bring more transparency and more regulation because the space is going to need it. It’s got a loss of confidence. You’re seeing that basically every global crypto exchange around the world – and there’s lots of them that are headquartered in Asia, like South Korea and in Japan – they're all getting outflows right now. Everybody has lost confidence in all of them so they’re going to need some kind of assurance through regulation and transparency that if you deposit your money on these brokerage exchanges, that your money is safe," Bianco said.

Bianco said the fallout could take months, or even a year to shake out, but added that the era of making fast money through crypto "is over right now."