FINRA to Examine Crypto Communication After FTX Crash

FINRA is ready to examine the communication of Firms related to crypto products.
FTX was among the top three crypto exchanges globally.

The U.S-based self-regulatory FINRA(The Financial Industry Regulatory) has announced plans to examine firms’ retail communications related to crypto products and services they offer.

According to the official targeted exam letter of FINRA, the Financial Industry Regulatory Authority will inspect and analyse how firms operate their retail communication from 1 July till the end of September.

Until now the decision to examine firms’ communication related to crypto products came after the collapse of the FTX exchange.

The crypto market was already heavily affected by crypto winters and the Luna crash, but the market situation worsened after the crash of FTX.

According to FINRA Rules, “Retail Communication” is any written(including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 days duration. The rule of written communication also includes Video, Social Media, Mobile applications and websites.

The report FINRA is majorly divided into five with six subsections in it.

Mention the date of communication and when it was available to the public.
Assurance is mandatory that the communication was filed with the FINRA advertising regulation department or not and it was filed mentioning the reference number is mandatory.
Whether the firm’s principal approves the communication identifying crypto assets or services mentioned in the communication.
FINRA also asked about the written supervisory procedure of the firm concerning the review approval record keeping and dissemination of communications in effect for any portion of the suitable period.

FINRA requested the firms to provide any additional compliance policies, manuals, training materials, compliance bulletins, and other written guidance for any portion of the Relevant Period concerning Communications.

The investigation began on 14 November, intending to investigate whether any retail crypto products or services were falsely advertised at the peak time of the crypto market.

FTX U.S, or FTX exchange, has spent millions of dollars on its promotion and sponsorship; as per reliable reports, it is noted that FTX, in the second quarter, started collaborating with leading leagues, events and teams.

Some major events with FTX as a leading investor are Miami Heats, Esport Sport TSM, F1 Racing, ICC T20 world cup and Mercedes F1 Racing.

Some famous personalities who were the brand ambassadors of FTX are Steph Curry, Tom Brady, Shaq, Naomi Osaka and Udonis Haslem(Captain of the Miami Heat).

A few of the brand ambassadors of FTX are in great trouble and are being sued by investors and users for promoting FTX.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing