The chairman of the Securities and Exchange Commission (SEC), the US federal financial markets regulator, spoke out about the collapse of the FTX platform during a speech on the US channel CNBC.
More regulation to come
Securities and Exchange Commission Chairman Gary Gensler was interviewed on CNBC about the fall of the FTX exchange.
Unsurprisingly he advocates more regulation to protect investors in cryptocurrencies. He also calls for companies to approach the SEC to comply with regulation and that time is running out and sanctions will be coming soon. He says the SEC wants to proceed in two ways:
1 – By working more with exchanges and crypto lending platforms to register and regulate them ;
2 – By forcing the platforms to apply the laws, with more than 100 legal actions issued by the SEC under his and his predecessor’s mandate. He recalls the SEC’s victory in a lawsuit against the LBRY crypto project and the sanctions against Kim Kardashian.
More transparency is requested for companies and entities wishing to make acquisitions or mergers by disclosing the cryptocurrencies and amounts held by these entities in order to avoid the same setbacks as with FTX’s FTT.
According to Gary Gensler the situation is the result of two main things. Firstly, the users’ deposits on FTX were used to trade against them and the users were obviously not informed of this. For the SEC Chairman, this case is linked to the fall of Terra (LUNA) several months ago.
For Gary Gensler, the world of crypto-currencies is a very interconnected world with a few central players. The fact that one of these central players (in this case FTX) was not transparent, used leverage and borrowed money for its investments and lost their clients’ funds.
Sam Bankman-Fried, head of the FTX exchange, had a meeting with the SEC Chairman in March. Gary Gensler claims to have made a strong case for transparency and regulation and did not confirm that he felt cheated by SBF.
Despite this event, Gensler reiterates that the technology is still interesting and that there are good innovations.
During the interview the topic of stablecoins with Tether was brought up, Gary stated that stablecoins that provide returns or rewards directly or indirectly could be considered Securities.
Gary Gensler interviewed by US channel CNBC
DidFTX take advantage of legal loopholes?
That’s what Congressman Tom Emmer, a Republican, says.
Interesting. @GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We’re looking into this. https://t.co/SznowgcP6V
– Tom Emmer (@RepTomEmmer) November 10, 2022
It says that the Securities and Exchange Commission, and in particular Gary Gensler, would have tried to take advantage of legal loopholes to obtain a regulatory monopoly.
Is this what Changpeng Zhao, the CEO of Binance, was talking about when he said on Twitter:
“We’re not going to do anything about it.
“We will not support people lobbying against other industry players behind their backs. “
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce. We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.
– CZ Binance (@cz_binance) November 6, 2022
