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FTX collapse sparks call by Janet Yellen for ‘more effective’ cryptocurrency oversight

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Treasury Secretary Janet Yellen on Wednesday called for stronger oversight. cryptocurrency market After the stunning collapse of crypto exchange FTX last week that threw the trillion-dollar industry into turmoil.

“The recent failures of major cryptocurrency exchanges and the unfortunate effects they have had on crypto asset owners and investors demonstrate the need to more effectively monitor the cryptocurrency market. ‘” Yellen said in a statement.

The Treasury Department and other regulators have identified risks to the cryptocurrency market over the past year, including “confusion of client assets, lack of transparency, and conflicts of interest.”

“We have very strong laws to protect investors and consumers for most financial instruments and markets designed to address these risks,” Yellen said. “Where existing regulations apply, they must be strictly enforced so that the same protections and principles apply to cryptoassets and services.”

Inside the Crash of Crypto Exchange FTX: Everything You Need to Know

Sam Bankman-Fried, Founder and CEO of the FTX Cryptocurrency Derivatives Exchange, speaks at the International Finance Association Annual Membership Meeting in Washington, DC on October 13, 2022. (Ting Shen/Bloomberg via Getty Images / Getty Images)

FTX, once the world’s third-largest exchange with a valuation of nearly $32 billion, announced on Friday that it was filing for bankruptcy, shocking the crypto industry alongside Alameda Research and other affiliates. gave. A few days ago, industry rival Binance dropped a deal to acquire a troubled competitor after seeing a book and learning that FTX “mishandled customer funds.”

The company’s founder and CEO, Sam Bankman-Fried, announced his resignation Friday when bankruptcy filings were filed in Delaware.

Both the company and Bankman-Fried have been investigated for possible securities violations in the U.S. and other countries, amid allegations that FTX used $10 billion in customer funds to back affiliated trading firm Alameda Research. I am receiving

Who is really responsible for the FTX CRYPTO collapse?

FTX logo and cryptocurrency

In this image, the representation of the cryptocurrency is displayed in front of the FTX logo. (Reuters/Dado Ruvic/Illustration)

The sudden collapse that threatened to upend futures markets has been likened to the crypto industry’s “Lehman Brothers” moment, sparking a global financial crisis in 2008 when a global financial services firm collapsed. I am referring to

It has raised major concerns about a largely unregulated industry.

Yellen He acknowledged that FTX’s impact is largely limited to crypto markets, but warned that its link to the traditional financial system “could raise broader financial stability concerns.”


Samuel Bankman-Fried

Sam Bankman-Fried, CEO of FTX US Derivatives, told the House Committee on Agriculture hearing on May 12, 2022, “The Changing Role of Markets: FTX Proposals and Trends in New Clearinghouse Models.” I testify in (Tom Williams/CQ-Roll Call, Inc via Getty Images / Getty Images)

“Going forward, it is critical that we do what is necessary to address these risks and act to protect consumers and promote financial stability.”

both panels Senate and House will hold hearings on the collapse of FTX next month. The House Financial Services Committee and Senate Banking Committee are planning hearings in December to consider the abrupt demise of FTX under the leadership of Democratic megadonor Bankman Freed.

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