SEC Chair Gary Gensler Answers Callouts on the Agency Following FTX Collapse

The broader crypto market witnessed a drastic hit following the collapse of crypto exchange FTX. Since the incident revolved around misuse of investor’s funds and subjected to their security, the authorities were called out for the same. The US SEC also received these callings for which the Chairperson showed up with clarification.

SEC Chair Calls Out Crypto Exchanges to Follow Regulations

Gary Gensler, the Securities and Exchange Commission Chair, considered the allegations on the agency to not keep the crypto firms in-line with the regulations are not right. His standpoint could be inferred as the SEC is not to blame for the malicious activities in crypto exchanges like unlawful trading led to implosion of FTX like mishaps.

In addition, Gensler unveiled that over a hundred enforcement cases were brought by the SEC within the crypto industry.

Soon after the FTX filed for bankruptcy in November 2022, the SEC was questioned and asked for the answers. Democrat Senator Elizabeth Warren was reported to call out the Commission to ‘suit up’ following the incident. She said it fell behind the crypto industry.

Senator Warren was not the only one raising concerns as in the House Financial Services Committee Members also sought the answers from the agency. They asked the SEC Chair about his knowledge on the matter of the Bahamian crypto exchange collapse.

Citing those questions, Gensler said that the agency is ‘already suited up.’

Gensler Thinks Crypto Exchanges has Flawed Model

Defying the arguments against the agency, Gensler said to blame crypto firms and held them liable to comply with the regulations. He compared their working model with the casinos and said the public look to invest in them seeking a better future, like the casinos.

The business model of these exchanges is to offer interest over the crypto investments in return to their users. However, it is possible that these firms would be trading against or ahead of their users. Such conflicts are not allowed within traditional finance, he added.

The SEC has been successful in discouraging other dubious crypto company practices. He used accusations of illegal operations against Coinbase and Poloniex as examples.

He claimed to have taken legal action against cryptocurrency lending platforms like BlockFi and to maintain his position as a zealous securities regulator, but he added, he does suggest to these intermediaries, these storefronts, and these casinos, if you wish, to come into compliance, work with the SEC to get into compliance, and disaggregate these businesses.

If cryptocurrency exchanges do not comply, according to Gensler, the SEC will take additional enforcement measures, but he did not specify what they would be. The basic protections—separating out these businesses into a separate exchange—will not be dropped, he added.

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