The drama behind the now failing digital currency exchange FTX is getting larger, and it’s giving Gary Gensler – the man behind the Securities and Exchange Commission (SEC) an excuse to deepen his involvement.
Gary Gensler Wants Higher SEC Involvement
FTX was, at one point, one of the largest and most popular digital currency exchanges out there. At only three years old (it was founded in 2019), the company soon rose to the top to become one of the most profitable platforms in the space, and many wondered how a firm could rise to fruition so fast.
Many believed this was the mark of a genius, and that genius allegedly came in the form of Sam Bankman-Fried, who was the head executive of the Bahamas-based exchange. Now, however, things have greatly turned around for the company, and not in a good way.
Due to what’s been labeled a “liquidity crunch,” the company is struggling to stay open. It initially turned to Binance for help in staying afloat, and it looked – at least for a while – like the larger firm was going to purchase FTX and ensure its customers could remain trading within the confines of the comfortable walls that had been formed.
Sadly, the deal didn’t go through, and Binance issued a statement claiming the problems FTX was facing were too complicated for it to handle. Bankman-Fried later issued an apology to his customers, claiming that he had “f*cked up.”
In any case, Gary Gensler of the SEC is now claiming the FTX exchange has the same writing on its forehead as the Terra Luna stable currency, which crashed hard during the summer. He said that the crypto space is not doing well, and so long as it remains unregulated, it’s going to continue to present dangers to investors everywhere. In an interview, Gensler said:
The runway is running out. Investors around the globe are getting hurt… This is not like the New York Stock Exchange or NASDAQ. There’s just a handful of lending platforms and a handful of so-called exchanges which commingle. It’s [a] toxic combination where they take people’s money, they borrow against it, it’s not much disclosure, and then they trade against their customers.
2022 has been a very bad year for crypto, and the FTX drama is only adding to the ongoing market turmoil. Bitcoin – the world’s number one digital currency by market cap – is now trading for less than $18K, its lowest position since June of this year. Overall, the asset has lost more than 70 percent of its value, while the crypto space in general is down by more than $2 trillion in valuation.
This has also been a year in which several crypto platforms have gone bankrupt or prevented customers from gaining access to their funds.