The head of the US Securities and Exchange Commission said FTX is working with a “toxic combination” of factors that could harm an investor.
to talk to CNBCSecurities and Exchange Commission (SEC) Chairman Gary Gensler compared the FTX crisis to Terra collapses And several other crypto platforms earlier this year.
“This is a highly interconnected world in cryptocurrency with a few focused players in the middle,” he said.
“One of those guys had toxic combinations of non-disclosure, client money, a lot of leverage (borrowing) and then tried to invest in that, and then when the markets turned against them, a lot of clients seemed to lose their money,” Gensler added.
The Securities and Exchange Commission is Reportedly checked into FTX Ongoing investigation for several months. Gensler did not confirm this in the interview.
The regulator also said that the crypto space is “highly incompatible” and that clear laws are already in place to protect consumers.
However, he agreed that investors “need better protection in this area.”
In an olive branch to crypto CEOs, Gensler said companies should “come and talk to us,” but cautioned that “the path is getting shorter” to compliance.
He also pointed the finger at “famous crypto entrepreneurs,” whom he said the public “may fall victim to,” but did not mention specific numbers.
Gensler, who taught A course in Blockchain At MIT, he reiterated his view that there are “some interesting innovations” in technology.
In the wake of the FTX liquidity crunch, it happened It turns out that three of the US authorities All of them conducted a search for the company.
In addition to deepening the Securities and Exchange Commission (SEC) from its current investigation, the Commodity Futures Trading Commission (CFTC) is now investigating the company.
according to The Wall Street JournalThe Department of Justice is also reviewing the exchange. Justice Department investigators are said to be in contact with the Securities and Exchange Commission.
If customer funds are lost in the FTX crash, it will likely increase pressure on lawmakers and regulators to tighten crypto regulations.
Senator Elizabeth Warren had already called for “more aggressive enforcement” of consumer protection laws after the FTX disaster. But Coinbase CEO Brian Armstrong said he is penalizing US companies for companies that largely trade abroad. “It’s useless. “
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