2022-11-12 09:00:00

The Function Of Regulators In The FTX Disaster

Bankman-Fried stated on Twitter that he will do all in his power to mitigate user damages before compensating shareholders, including “scaling back” his investment firm Alameda Research. As per Bloomberg’s billionaire’s team, FTX, now valued at about $1, had acquired $1.8 billion from investors like SoftBank, BlackRock, Tiger Global, and the Ontario Teachers’ Pension Plan.

 

This situation has a serious risk of spreading. Numerous enterprises in which SBF invests, frequently utilizing the FTT exchange currency, could have significant treasury deficiencies. Companies like Sequoia as well as Galaxy Digital are taking off huge amounts of money. Solana (also known as “SamCoin”) is faltering.

 

The bankruptcy of the investment firm Three Arrows Capital taught the cryptocurrency sector how intertwined the market really is. In fact, new information reveals that Alameda’s financial issues started as a result of losing $500,000,000 to Voyager Digital, which SBF eventually acquired and which had fallen when Terra fell.

 

The entire purpose of cryptocurrency was to empower individuals to “become their own bank” by encouraging self-reliance and self-custody. Rather, the sector has imitated the federal financial sector in its entirety, including “bank runs.” People keep their money on centralized exchanges rather than connecting with blockchain systems and peers directly. They trusted egotistical individuals with Wall Street qualifications instead of employing unreliable financial processes.

 

The DOJ (Department of Justice), the SEC (Securities and Exchange Commission), and the CFTC (Commodity Futures Trading Commission) are apparently expanding examinations into FTX that some of them had already started months ago in the aftermath of the latest severe crypto crisis.

 

The SEC’s track record of enforcement actions is similarly absurd. The SEC accused Kim Kardashian of endorsing Ethereum Max, a coin that history will remember, and a company named Hydrogen Technology Corp. this year as the sector burned. Although these lawsuits are victorious, given the agency’s noticeably low budget, it still seems like a waste of time and resources.

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