The current administration at FTX is making every effort to revive the exchange and reopen its functioning. Latest reports also suggest that NYSE’s former president, Tom Farley has shown strong interest in acquiring FTC and reviving it again.
SEC Chair Gary Gensler Is Watching
While speaking at the DC Fintech Week, SEC chair Gary Gensler said that he is ok with FTX reopening its operations, however, that needs to happen with a clear understanding of the law.
Earlier this year in May, Farley introduced his own digital asset exchange named Bullish, and it is currently among the leading candidates in the bankruptcy auction. While speaking to CNBC, 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.”
FTX and Alameda were initially designed to maintain a strict separation, but the evidence presented during the monthlong trial revealed a significant level of interconnectedness between the two entities. It became evident that FTX and Alameda had an intricate and concerning relationship.
Bankman-Fried simultaneously managed both an exchange and a proprietary trading firm, raising questions about potential conflicts of interest and operational entanglement.
As per the recent report, both platforms have been transferring millions of dollars worth of assets, reportedly for debt restructuring.
FTX Can’t Bypass the Law
Gensler emphasized that when contemplating new regulatory measures for the industry, the existing securities laws are already “robust and effective.” The key lies in their enforcement.
“There’s no inherent conflict between crypto and securities laws,” he stated. “The challenge lies in the fact that numerous global players are presently operating without adhering to these well-established regulations”. The SEC chair added:
“Think about how many actors in this space are not complying right now with international sanctions and money laundering laws and are using crypto for nefarious or bad actions”.
Gensler noted that in the past six years, the SEC has taken legal action in the form of either lawsuits or settlements in approximately 150 crypto-related cases. Notably, one ongoing dispute involves Coinbase, a publicly traded U.S. cryptocurrency exchange that has expressed intentions to relocate due to regulatory challenges.
Gensler emphasized the importance of companies operating within the bounds of the law, although he refrained from mentioning specific cases during his statement.