Ocjenjujući situaciju
The “apparent collapse” of the exchange was confirmed to be under investigation by the California Department of Financial Protection and Innovation (DFPI) on November 10.
The troubling news began to surface earlier, after rumors about FTX’s issues first emerged on November 2. There were concerns that Alameda held an excessive amount of FTX Tokens (FTT). Alameda was also founded by SBF.
On November 7, issues surrounding FTX withdrawals indicated a possible bank run. On November 9, Binance considered acquiring FTX but ultimately decided against it due to certain concerns. Last week also saw regulatory developments related to the crisis, affecting major participants like Sequoia Capital and reports that SBF had requested $8 billion to cover exchange withdrawals.
The Securities Commission of The Bahamas froze FTX’s assets and halted its registration on November 10, citing concerns that the company had misappropriated client funds. The Bahamian Supreme Court appointed a provisional liquidator, meaning FTX must seek court approval before accessing its assets. Withdrawals from the exchange have been inconsistent, with some transactions appearing to be allowed while others are halted. In addition, FTX and Tron have reached an agreement allowing users to move their TRX, BTT, JST, SUN, and HT holdings freely from the exchange to external wallets.
The White House urges cautious cryptocurrency regulations
In response to recent events, the Biden administration has decided to closely monitor the cryptocurrency market. The government is enlisting support from U.S. regulatory bodies to do so. During a press briefing on November 10, White House Press Secretary Karine Jean-Pierre stated, “The administration has long warned that without proper regulation, virtual currencies could harm ordinary Americans.” She continued, “The recent events only reinforce these concerns and demonstrate the need for careful regulation of cryptocurrencies.”
This development is particularly interesting given that SBF, who had long been a vocal advocate for stricter regulations and government oversight of crypto, seems to have abandoned the industry’s decentralization ideals.
The origins of the collapse and its effects on lawmakers
Some Twitter users reported that FTX clients were receiving SMS and email notifications asking them to log into the app and website, both of which had already been compromised by a Trojan virus, documenting the collapse and potential security risks in real-time.
The stigma surrounding Sam Bankman-Fried’s fall from grace could tarnish the reputations of legislators who accepted his donations and those who previously worked as regulators or Capitol Hill employees for crypto firms. During the 2022 election cycle, Bankman-Fried was one of the largest political donors, contributing $40 million to Democrats and other political causes. His donations were primarily directed toward supporting crypto-friendly candidates in the Democratic primaries.
Similar to many other crypto startups, FTX aggressively recruited former federal regulators and Capitol Hill workers. While controversial, this strategy has been common in the financial services sector for decades.
A broader campaign to push for new regulations to accommodate digital asset businesses, gaining momentum among both Republicans and Democrats, is now at risk of being derailed by the FTX collapse. This has caused significant disruption in the crypto market, posing new challenges for FTX’s competitors and other firms.
Crypto industry leaders and activists have distanced themselves from Bankman-Fried, and CryptoChipy will continue to provide updates as this situation evolves, likely to be ongoing for quite some time.
