Brain Armstrong, the CEO of Coinbase, speaking on the effect the FTX liquidity issue is having on American investors, blames the Securities and exchange commission (SEC) for not providing regulatory guidance.
While the cryptocurrency exchange anxiously searches for investors, the FTX liquidity issue continues to worsen. The present issue has caught the attention of regulators and lawmakers alike. Elizabeth Warren, a senator, used this occasion to criticize the cryptocurrency industry. She stated in a tweet on Wednesday:
“The collapse of one of the largest crypto platforms shows how much of the industry appears to be smoke and mirrors. We need more aggressive enforcement and I’m going to keep pushing @SECGov to enforce the law to protect consumers and financial stability”.
Brian Armstrong, CEO of Coinbase, chimed in and said that FTX.com was an overseas exchange and not subject to U.S. SEC regulation. He further laid the blame at the feet of the SEC, claiming that the agency did not offer clarification in the United States.
Because of this, about 95% of trading activity as well as some American investors switched to offshore exchanges. Punishing American businesses in the wake of the FTX collapse, he claimed, is absurd.
Brad Garlinghouse, CEO of Ripple, concurred with the Coinbase CEO’s remarks. To maintain confidence and openness, he continued, crypto businesses must get governmental guidelines. Users have started switching to offshore exchanges, Galinghouse continued, because there is no guidance in the United States.
The head of Ripple continued by advising the American regulators to follow Singapore’s lead, where there is “a licensing structure, token taxonomy written out, and much more.”
He said, “They can regulate cryptocurrency effectively because they’ve done the work to define what “good” looks like and know all tokens aren’t securities.
U.S. SEC and CFTC to investigate FTX
According to sources with knowledge of the situation, both the CFTC and the U.S. SEC are looking into how FTX handles customer funds. The SEC reportedly started looking into FTX U.S.’s crypto lending activity months ago. Additionally citing the sources, Bloomberg stated:
American regulators are also looking into the platform’s relationship with its American counterpart FTX US and Bankman-Fried’s trading house Alameda Research.
Sam Bankman-Fried, the CEO of FTX, has been looking into alternatives since Coinbase withdrew from the acquisition agreement on Wednesday. Justin Sun, the creator of Tron, has also alluded to a prospective collaboration with FTX.
