There are now far more questions than answers about what happened to the collapsed cryptocurrency exchange FTX. last weekCan the account holder get his money back? Will Sam Bankman-Fried, also known as SBF, be criminally charged? What will happen to everyone who receives his donations?finally the beginning of the end of crypto?
And the question before us is: Why did this happen, and what can we do to prevent it from happening again? Bankman-Fried, his trading firm Alameda Research, And since much of the initial research into FTX is just beginning, the answer to this question is complicated. Still, calls for regulation in an industry that has long been touted as lacking regulation have been reinvigorated by calls that have already emerged. As one of its main features.
These demands are now getting louder and everyone seems to agree that something needs to be done about crypto regulation.On the other hand, FTX already filed for bankruptcythe Liquidators of the Bahamas said on Wednesday, “Effectivenessof minutes.
“FTX bankruptcy is devastating and alarming, but not surprising at the same time.” Specification along with Sen. Kirsten Gillibrand (D-NY) told Recode. “The bottom line is that comprehensive regulation needs to be put in place to keep the bad guys out and ensure that consumers can trust the institutions they trust with their hard-earned money.”
While the FTX crash didn’t crash the stock market, other cryptocurrency platforms are certainly feeling the ripple effect, with Washington leaders calling for more or better regulation across cryptocurrencies. seize the opportunity to request Senator Elizabeth Warren (D-Massachusetts) tweeted on Friday that the collapse of FTXstronger rulesConversely, cryptocurrency advocate Rep. Jake Oakincross (D-Massachusetts) said some of the proposals have already been made in Congress. Measurement should be considered.US Treasury Secretary Janet Yellen Said FTX Demise Is Proof That Cryptocurrency Platforms Need Better Protection For Customers, Securities and Exchange Commission Chairman Gary Gensler Alleged Much of the broader cryptocurrency industry has shown that it is “not compliant” with existing regulations.
A few condemnation Investors who didn’t investigate FTX more closely before giving the company billions of dollars. However, many members of the crypto industry aloud about their dissatisfaction with the government’s current approach. A lot of people are mad at the SEC, especially Gensler. Rep. Tom Emmer (R-Minnesota), who co-leads the Congressional Blockchain caucus, said: defendant The SEC, which backed FTX and Bankman-Fried in trying to establish a monopoly, and Coinbase CEO Brian Armstrong accused the commission of not doing so. Clarification of regulationsSome crypto skeptics basically think the SEC has dropped the ball.
Software engineer and prominent crypto industry critic Stephen Diehl said, “The FTX collapse was a failure of financial regulators. There are no cops in the crypto market.”
FTX is not the first financial institution to collapse allegations of fraud, and what ultimately went down with FTX may not be clear for some time. He said it looks more likely.Crypto exchanges are not Regulated like a bank Securities companyThis lack of oversight has made cryptocurrencies a much more speculative investment and more attractive to some investors, but FTX is also a riskier place to store assets. became.not in crypto account federal deposit insurance.
Rohan Gray, a professor at Willamette University who has advised Rep. It’s not always possible that it was expressed that way.” “But the actual fraud itself… Stealing customers’ money is an age-old story.”
The SEC, which regulates US derivatives, and the Commodity Futures Trading Commission (CFTC), along with the US Attorney General’s Office in Manhattan and the Department of Justice, are currently investigating the implosion of FTX.The company technically base In Bahamas, exchanges may have enough links to the US claimThe likelihood of a conviction is that Bankman-Fried was intended Other legal experts have suggested that moving customer funds to support Alameda violates FTX rules. Terms of ServiceInvestigators may also focus on FTX US, the more regulated US-based side of FTX’s business.
Christine Parlor, a finance professor at Berkeley’s Haas School of Business, said FTX US has an “alphabet soup of licensing” and some of its deals are drop down Under CFTC supervision. “What was clearly missing was a high-level overview: the fact that the funds were not ring-fenced,” she said.
It’s not clear where the debate over regulation will go next. The House Financial Services Committee announced holding public hearings on FTX in December, and another hearing Held by the Senate Banking Committee. Yet there is little agreement on what the best laws are.Senate Agriculture Committee delay Markup of a bipartisan crypto proposal backed by FTX and Bankman-Fried.DM on Twitter Interview with Kelsey Piper for Vox this weekBankman-Fried said, “Fuck regulators.”
Some suggest that the solution is not necessarily pass a new law, rather to fund and hire more people to enforce the laws we already have. Gray suggested that in addition to new legislation to curb the crypto industry and regulate stablecoins, governments should also consider legislation to support initiatives such as public banking. Xuan-Thao Nguyen, director of the Asian Law Center at the University of Washington School of Law, told Recode that part of the solution would include reviewing regulations that would require cryptocurrency losses and gains to be reported at fair value, and protection should be included. For crypto custody accounts similar to those attached to stock accounts operated by brokerage firms.
Part of the challenge, of course, is navigating the broader crypto industry, which spends a lot of time and money pushing for the necessary legislation. (Until very recently, Bankman-Fried was trying to do this himself.) Meanwhile, discussions about which federal agency should lead cryptocurrency regulation, particularly his SEC and Commodity Futures Trading Commission’s the tension between certainly continueSigned by President Joe Biden in March administrative order It has launched extensive efforts to regulate cryptocurrencies. While the move was greatly celebrated in the cryptocurrency industry (which drove Bitcoin’s price up), it’s not yet clear whether the collapse of FTX will change the approach to creating new rules. regulator Other countries are also participating.
“How was Bernie Madoff legally allowed? , says Aaron Klein, senior economic research fellow at the Brookings Institution. “‘Wow, this is really bad. We should have had more regulations to stop it.'” And you’ll probably say, ‘You can’t regulate honesty.’ ”
Disclosure: This August, Bankman-Fried’s philanthropic foundation, Building a Stronger Future, was awarded to Vox’s Future Perfect. forgive For the 2023 reporting project. That project is currently on pause.
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