SEC Head Open To Rebooting FTX

SEC Head Open To Rebooting FTX

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The US Securities and Exchange Commission (SEC) chair, Gary Gensler, has claimed that proper leadership and compliance could help revive the bankrupt crypto exchange. 

FTX Reboot Possible? 

In a November 8 interview, the famously anti-crypto chair of the SEC, Gary Gensler, stated that an FTX revival could happen, provided the new leadership maintained compliance with regulatory and legal frameworks. He stated that the new CEO of the company would need a very clear understanding of the law to prevent a repeat of the FTX fiasco. 

New Contenders For FTX Leadership

The mention of the new leadership and a possible reboot is a direct reference to the reports of three potential buyers who are contending with each other to buy the remains of the bankrupt crypto exchange. These include digital asset exchange Bullish, fintech startup Figure Technologies, and cryptocurrency venture capital firm Proof Group.

The three organizations would be leading a consortium of further investors. The winner could restart the exchange after its planned exit from bankruptcy next year, according to the WSJ report.

Gensler: “Do It Within Law”

Referring to Bullish CEO Tom Farley (also the former President of the NYSE), Gensler said, 

“If Tom or anybody else wanted to be in this field, I would say, Do it within the law. Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures — and also that you’re not commingling all these functions, trading against your customers. Or using their crypto assets for your own purposes.”

Gensler emphasized the final point by citing an example of the NYSE, which would never be allowed to operate a hedge fund and trade against members or customers in the market. 

The FTX Drama

In the interview, Gensler also talks about FTX’s bankruptcy and the unscrupulous practices that went on behind the four walls of the exchange. Just last week, founder Sam Bankman-Fried was tried and found guilty on all seven charges of money laundering and fraud. 

The legal proceedings revealed that the crypto exchange was funneling customer funds to its sister concern, Alameda Research, which was acting as a market maker for the FTX exchange and was extended a $65 billion line of credit with no collateral, among other privileges. 

SEC Against Bankman-Fried

Bankman-Fried is also facing charges from both the CFTC and SEC, separate from the criminal charges that he has been found guilty on. The latter accused the disgraced founder of running a fraudulent organization from the very beginning of FTX. 

Calling for tighter regulations to prevent fraud in the industry, Gensler said, 

“There’s nothing about crypto that’s incompatible with securities laws. You’ve got just a lot of worldwide actors that are currently not complying with these time-tested laws.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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