The industry lost its calm instantly after the FTX reported its collapse. Sam Bankman-Fried’s alleged misdeeds resulted in what is likely to go down in history as the biggest fall in the industry to date. Charles Hoskinson, a co-founder of Cardano, has acknowledged this in his tweet, saying that he knew the entire industry was about to have a hard time the minute FTX collapsed.
This tweet refers to the SEC taking stringent action against crypto projects, specifically exchanges. The US Securities and Exchange Commission, or SEC, has indeed taken action against not only FTX but also Kraken and Paxos. This has sparked concerns on the future of cryptocurrencies, particularly in the United States.
A tweet from Charles was in response to a user asking about the epicenter of the pushback. Kraken was once a leader in the industry, but it later had to shut down its staking services and settle the dispute with the SEC by paying a fine in penalties worth $30 million. Staking services of Kraken were shut down on February 08, 2023, and there has not been a word on its revival since then.
It all began with Kraken, when the SEC began investigating whether the platform violated any securities laws. Allegedly, the SEC concluded that clients were being given unregistered securities, hence creating an uncertain atmosphere that could eventually have a macroeconomic impact on the economy.
Customers of FTX, once the best US crypto exchange, have had their funds stuck on the platform. The withdrawal process has been halted, and a payback plan is being drafted per the last information.
Paxos and Binance have been victims of the SEC’s takedown action. The platforms were asked to halt the mining of new BUSD tokens. They have abided by the order; however, customers can avail themselves of the redemption of their tokens until February 2024. The minting of new BUSD will be halted with effect from February 21, 2023, with Paxos Trust continuing to manage the reserves.
Coinbase, too, has been forced to issue a clarification on its staking services. Assertions and questions were raised by the SEC. Brian Armstrong, the CEO of Coinbase, responded by claiming that his company’s staking services are not securities.
Paul Grewal took the lion’s share of the initiative’s leadership by ensuring that all investors are provided with crucial information. Under all cases, clients retain ownership, and Coinbase does not assert ownership.
Both sides kept swinging from one side to another, making it appear that nothing more may be required by the SEC. A statement is expected to confirm Coinbase’s assumption.
In the US, cryptocurrency’s future is uncertain. Brian Armstrong has even argued that prohibiting retail consumers would be a poor move for the nation. While this will eventually be made clear, it is safe to predict that the cryptocurrency market will remain volatile for a few more years.