SEC Chair Gary Gensler Says Crypto Companies Warned, After FTX Meltdown
Gary Gensler FTX Comments: After the fallout of Sam Bankman-Fried‘s FTX, Gary Gensler spoke on the crypto crash and the way forward. The US arm of FTX is already under investigation by the US SEC over how it handled customer assets. Also, the Securities and Exchange Commission is probing links between FTX and other companies belonging to Sam Bankman-Fried. The investigation is reportedly centered around the lead up to the liquidity crunch at the crypto exchange.
The news of FTX’s potential path to insolvency and the subsequent announcement of Binance’s consideration of acquisition led to a crypto crash. However, Binance said it was not proceeding with the FTX acquisition. Meanwhile, SEC chair Gary Gensler spoke on the current scenario in crypto market. Speaking to CNBC on Thursday, Gensler said there is a need for protection for crypto investors. He said the runway is getting shorter.
The SEC chair said crypto companies have been warned. He added that it would take time to building evidence and facts. He added that a lot of customers lost money in crypto, which is a very interconnected world with a few concentrated players. Gensler stressed on the need for investor protection in the industry. He said crypto is a field that is significantly non-compliant but tied with regulation.
“Building the evidence, building the facts, often takes time. Crypto companies need to work with the SEC.”
The SEC chair also said building evidence against crypto players is time taking as companies transact with each other. He termed it a ‘toxic combination’ involved with investor money, and money borrowed against it without disclosure.
Tough Period For Crypto Companies: Mike Novogratz
Meanwhile, Mike Novogratz, CEO of Galaxy Digital, said the FTX episode will bring hardships to crypto companies. Novogratz’s company had in its quarterly report mentioned it had some exposure to FTX. The company said it holds cash and digital assets in FTX, a bulk of which is in the withdrawal process.
“Bitcoin will stay. It’s going to be a tough period for crypto companies. You’re going to see a lot go under.”
On the other side, Bitcoin (BTC) price continues to dip further as the market repsonds to the news of Binance’s disinterest in buying the FTX crypto exchange. As of writing, BTC price stands at $16,668, down nearly 5% in last 24 hours, according to price tracking platform CoinMarketCap. The top cryptocurrency lost around 18% in value over the last 7 days.
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