Home » After FTX, NY Regulator Sets Sights on Crypto Firms Co-Mingling Assets

After FTX, NY Regulator Sets Sights on Crypto Firms Co-Mingling Assets

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  • The New York Department of Financial Services released a set of guidelines for cryptocurrency companies on Monday.
  • The agency reiterated that companies should keep client funds separate to protect them.
  • The former FTX executive allegedly misappropriated customer funds at sister trading firm Alameda Research.

The New York Financial Services Department (NYSDFS) released a set of guidelines for cryptocurrency companies on Monday, reiterating that customer assets should be kept segregated to protect them in case the company goes bankrupt. rice field.

The regulatory post comes after FTX’s bankruptcy. US prosecutor called it “one of the greatest financial frauds in American history.”

The cryptocurrency exchange founded by Sam Bankman-Fried has allegedly misused billions of dollars in customer deposits for the day-to-day operations of sister trading firm Alameda Research.embarrassed founder pleaded not guilty He faces eight counts related to the company’s bankruptcy in New York, including wire fraud and campaign finance violations.

“As custodians of the assets of others, virtual currency entities (“VCE”) acting as custodians (“VCE Custodians”) play an important role in the financial system and should therefore be subject to comprehensive and secure regulatory A framework is essential to protect customers and customers. Protecting Trust” NYSDFS said in a statement.

The agency said the guidance was an attempt to “clarify more clearly with respect to standards and practices.” It helps us to ensure that we are providing a level of customer protection.

Businesses offering crypto-related services must have specific business licenses to operate within the state. This is called a BitLicense and is issued by NYSDFS.

NYSDFS recently cracked down on a number of crypto-related companies.

The agency announced a $100 million settlement with Coinbase earlier this month over its compliance with rules to prevent money laundering.

And before that, the cryptocurrency division of Robinhood Markets was fined $30 million by the department, alleging the company violated consumer protection, anti-money laundering and cybersecurity regulations.

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