FTX Exchange Could Work with New Leadership, SEC Chair Says
According to SEC chair Gary Gensler, a revived FTX could work if new leadership understands and complies with the law. The statement was made during DC Fintech Week, in response to reports that Tom Farley, a former president of the New York Stock Exchange, is among the bidders vying to buy the bankrupt crypto exchange.
Gensler emphasized the importance of adhering to the law and building investor trust in the field. This comes after FTX founder Sam Bankman-Fried was found guilty on several counts, including fraud and money laundering charges. The exchange filed for bankruptcy after allegations of funneling customer funds to a sister hedge fund.
Challenges in Separating Functions
The case revealed problematic practices between FTX and Alameda Research, showing how they were closely intertwined despite supposed separation. Market experts also highlighted concerns about Bankman-Fried operating both an exchange and a prop shop, which isn’t allowed in regulated capital markets.
Rules and Compliance
Gensler emphasized that existing securities laws are robust and strong but need proper enforcement. He stressed that crypto isn’t incompatible with securities laws but that many international actors currently do not comply with these regulations.
Regulatory Challenges
FTX was based in the Bahamas and mostly used by non-U.S. customers. Gensler cited Binance as another example under scrutiny by U.S. regulators for allegedly subverting controls to allow U.S. customers to trade on its unregulated international exchange.
Hot Take: Regulatory Oversight Vital for Crypto Industry
Gensler’s statements highlight the need for strong regulatory oversight in the crypto industry to ensure compliance with existing securities laws and prevent nefarious activities facilitated by non-compliance.
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