The head of the U.S. Securities and Exchange Commission is responding to the collapse of FTX by saying the crypto industry is largely non-compliant with existing regulations.
In a new interview with CNBC, SEC head Gary Gensler discusses the collapse of Sam Bankman-Fried’s giant crypto exchange FTX and its trading arm Alameda Research.
“It’s really as old as finance in its antiquity. When you mix together a bunch of customer money, non-disclosure and leverage, borrowing against it, and inside these companies trading, investors get hurt…
This is a very interconnected world in crypto with a few concentrated players in the middle and one of those concentrated players would have the toxic combinations of lack of disclosure, customer money, a lot of leverage, meaning borrowing, and then trying to invest with that. And then when markets turned on him, it appears that a lot of customers lost money and that’s where our mission is, it’s about those customers.”
Gensler says that the SEC does indeed have clear regulations, and would like to work with crypto platforms to protect the public but will litigate if necessary.
“Look, I think that investors need better protection in this space. But I would say this, this is a field that’s significantly non-compliant. But it has got regulations and those regulations are often very clear. And we have multiple paths. One path is working with those crypto exchanges, and crypto lending platforms and to get them properly registered. And why that matters is that so the public is protected. But we have another path which is enforcement.
We’ve brought, between my predecessor and the teams now at the SEC, at least 100 actions in this case. And we’ve been very clear in these various enforcement actions. We had a big win even this week on a crypto token called LBRY where a court clearly said, ‘You’ve been on fair notice and yes, this is a security under the securities law.’”
Bloomberg News previously reported the SEC had begun “months ago” investigating FTX’s US arm, FTX US.
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Source: https://dailyhodl.com/2022/11/10/sec-chair-gary-gensler-addresses-ftx-implosion-says-regulations-very-clear-but-crypto-industry-non-compliant/