Brian Armstrong pushes to have an easy spot on US Cos. amid FTX crisis

FTX now sees nothing going in its favor. The Securities and Exchange Commission and the Department of Justice are investigating the venture’s handling of customer funds. Certain assets should have been registered with the SEC; otherwise, FTX could be charged with breaking US regulations governing exchanges.

Due to the liquidity shortage, users cannot withdraw their funds. Experts have expressed sympathy, stating that it is difficult to watch one’s funds trapped in a platform. A non-binding Letter of Interest was signed by Binance, stating the company’s interest in acquiring the non-US operations. This agreement has been terminated, and FTX is now fighting a war.

To protect its customers’ interests, FTX has asked its investors for up to $8 billion in funding. This has oiled the wheels in the crypto market, which continues to see a decline in its total value. Bitcoin is near $16,000, with Solana losing 44% in the market.

Several crypto firms have taken a stand away from FTX citing that their interest is minimal in the crypto exchange platform.

While FTX tries to get customers their money, the SEC and JD want to know how it’s being handled, if all the appropriate assets are listed with the regulator, and what kind of relationship its US office has with the parent business.

The regulatory division has asked FTX’s legal team for more paperwork and explanations. Alameda Research is also being investigated.

Investigations are getting a grip on the situation, with expected collateral damage. The US regulator has been planning to wrangle crypto firms for a long time to protect the interests of investors. The FTX crisis could have triggered that response, accelerating the move by the US financial regulator.

Binance, along with the Coinbase exchange, is under investigation. The crypto exchange platforms are required to align their operations with the principles of the regulatory authorities. This involves submitting regular disclosures, disclosing transaction information, and maintaining a mechanism to prevent market manipulation.

In the case of insolvency, cryptocurrency exchanges are required to keep their customers’ assets separate from their own. They must direct the buy-sell orders of their investors to a trading venue that provides a competitive price for the securities. Performing all functions in the same manner creates a conflict of interest, which is obviously not to their advantage. According to SEC Chairman Gary Gensler, the fundamental concept must be to separate broker-like operations from exchange-like functions.

Brian Armstrong, co-founder and CEO of Coinbase, took to Twitter to clarify his position, stating that FTX was an offshore exchange that was not regulated by the SEC. Punishing US companies makes no sense as the problem lies with the SEC failing to clarify its regulations in the US, pushing a large number of American investors offshore.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 66,215.74
ethereum
Ethereum (ETH) $ 3,492.98
tether
Tether (USDT) $ 0.99981
bnb
BNB (BNB) $ 603.95
solana
Solana (SOL) $ 144.14
xrp
XRP (XRP) $ 0.476167
dogecoin
Dogecoin (DOGE) $ 0.135594
cardano
Cardano (ADA) $ 0.411952