Bad weather for FTX! After a huge loss, Sam Bankman-Fried has to deal with other pressures. SEC Chairman Gary Gensler has come out and once again he is going after crypto exchanges. The latter gives his opinion on the crisis that the exchange platform is going through.
What are the reasons behind FTX issues? Response from Gary Gensler
As usual, Gary Gensler, the chairman of the Securities Exchange Commission (SEC) intervened after the crisis that FTX is currently going through. After long enjoying a glorious period, the Sam Bankman-Fried exchange now finds itself on the other side. However, Gary Gensler has a strong idea about FTX’s financial losses.
According to him, the exchange was operating with a very bad combination of toxic factors that could harm investors. He adds that the FTX crisis is no different from the collapse of Terra Luna and all the other exchanges that have sunk this year.
The key element of cryptocurrencies is undoubtedly decentralization. However, for some exchanges like FTX, centralization is still required. As a result, the latter would probably be responsible for his fall. The Chairman of the SEC asserts that “It’s a very interconnected world in crypto with a few players concentrated in the middle“.
Thus, one of the players had toxic factors that caused the negotiators to lose money. Currently, a trio of US authorities are investigating the company. Apart from the Commodity Futures Trading Commission (CFTC) and the Department of Justice (DoJ), it would appear that the SEC is also investigating FTX.
Faced with the resurgence of crises in the crypto ecosystem, Senator Elizabeth Warren is calling for much more active enforcement of consumer protection laws. But as Brian Armstrong, the CEO of Coinbase, so aptly put it, it would be foolish to punish American companies for the setbacks of those operating largely overseas.
Regarding consumer protection, Gary Gensler agrees with the senator. The FTX crisis is just one of many, so it would be better to establish fixed rules to avoid some inconvenience.
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