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SEC Gary Gensler warns crypto companies after FTX meltdown

  • Gary Gensler of Fried's FTX discusses the crypto crisis and the future after Sam Bankman. US SEC is investigating how FTX US handled customer assets. The SEC is also investigating FTX's ties to Sam Bankman-other Fried's firms. The examination reportedly focuses on the bitcoin exchange's liquidity restriction.

  • Binance considering buying FTX and rumours that FTX may go bankrupt caused a coin slump. Binance cancelled the FTX purchase. Gary Gensler, head of the SEC, discussed cryptocurrencies. Gensler said cryptocurrency investors need protection in a CNBC interview Thursday. He stated the runway is shrinking.

11 Nov 2022 By: Sudeep Saxena
SEC Gary Gensler war

Following the fallout from Sam Bankman-FTX, Fried's Gary Gensler discussed the cryptocurrency meltdown and the way forward.

After Sam Bankman-repercussions, Fried's FTX's Gary Gensler discussed the crypto meltdown and the way forward. The US SEC is already looking into how the FTX US subsidiary handled customer assets. The Securities and Exchange Commission is also looking into possible connections between FTX and other businesses owned by Sam Bankman-Fried. According to reports, the probe is focused on the events leading up to the cryptocurrency exchange's liquidity constraint.

A crypto drop resulted from the statement that Binance was considering buying FTX and the subsequent news that FTX might go bankrupt. However, Binance declared that it was abandoning the FTX acquisition. SEC chairman Gary Gensler discussed the state of the cryptocurrency industry in the meanwhile. In an interview with CNBC on Thursday, Gensler asserted that cryptocurrency investors need to be protected. The runway is growing shorter, he claimed.

Crypto firms, according to the SEC chair, have been warned. He continued by saying that accumulating facts and evidence would take time. He continued by saying that many clients lost money in the highly connected world of cryptocurrency, which has a small number of consolidated participants. Gensler emphasised the necessity of investor protection in the sector. Cryptography, he claimed, is a field that is largely out of compliance yet is connected to regulation. It frequently takes time to build the facts and the evidence. ICO companies must cooperate with the SEC.

The SEC head added that gathering evidence against cryptocurrency participants takes time since businesses interact with one another. He referred to the use of investor money and money that was secretly borrowed against it as a "toxic combination."

Crypto Company Hard Times: Mike Novogratz

The FTX episode, according to Mike Novogratz, CEO of Galaxy Digital, will be difficult for crypto firms. The company owned by Novogratz disclosed in its quarterly report that it has some exposure to FTX. The business claimed to have cash and digital assets in FTX, the majority of which are undergoing withdrawal. Bitcoin is here to stay. The coming months will be difficult for cryptocurrency businesses. You'll witness a lot of businesses fail.

On the other hand, when the market reacts to the news that Binance is not interested in purchasing the FTX cryptocurrency exchange, the price of Bitcoin (BTC) keeps falling. According to price monitoring site CoinGabbar, the price of one bitcoin is at $17,755, down roughly 12% over the past 24 hours. Over the past week, the top cryptocurrency saw a value loss of over 18%.