Uncertain regulations prompted 95% of offshore trading activity: Coinbase CEO

  • Coinbase CEO Brian Armstrong blames US agencies for unclear regulations.

  • Reports noted that US SEC & CFTC are investigating FTX’s operations

10 Nov 2022 By: Rohit Tripathi
Uncertain regulation

Coinbase CEO Brian Armstrong was not pleased with the news that US 

Regulators were looking into FTX.US along with Coinbase and Binance.US in the aftermath of the FTX crisis.

Armstrong stated that the enforcement action against US-based companies for irregularities committed by an offshore crypto exchange that fall beyond the jurisdiction of US regulators makes no sense.

Armstrong's remarks came in response to Senator Elizabeth Warren's plea for aggressive enforcement in the aftermath of the FTX crisis. The CEO of Coinbase criticized the SEC for the lack of regulatory clarity in the United States, which he estimates drove 95% of trading activity to offshore exchanges.

Ripple CEO Brad Garlinghouse, who is currently involved in a securities case with the SEC, cited Singapore as an example. He stated that companies in the United States have little advice on how to comply, whereas in Singapore, there is a clear licensing system and tax economy, making compliance considerably easier.

The collapse of the world's third-largest cryptocurrency exchange finally drew the attention of US regulatory agencies. As per recent reports, the US Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) are looking into the exchange's subsidiary in the United States.

The reports added that regulators are looking into whether some of FTX's crypto lending products constitute as securities. In addition, regulators are investigating its ties to the parent business, which is based in The Bahamas.

FTX was one of the largest cryptocurrency exchanges, serving millions of consumers worldwide. Up until January 2022, the exchange has raised billions in multiple funding rounds. Even during the second quarter's peak of crypto contagion, FTX appeared unscathed and even bailed out several lending firms.

However, as of today, Binance backs off from the acquisition deal within 48 hours of its announcement. There have been new allegations of misuse of user funds and the use of their own native token, FTX Token, as collateral. The liquidity issue is so severe that SBF reportedly requested $8 billion in emergency capital from investors.

Read also: Sequoia Capital Reduces It's Whole $214 Million FTX Holding To Zero