Following FTX’s liquidity problems and recent bankruptcy, United States Senate Finance Committee Chair Ron Wyden has reached out to six cryptocurrency firms for information on consumer safety.
Wyden sent letters to the top crypto exchanges: Coinbase, Binance, Gemini, Kraken, KuCoin, and Bitfinex. On November 28, he asked about their preparedness and backup plans for a meltdown similar to FTX’s. The senator claimed that FTX customers lacked the same “protections” afforded to customers of traditional financial institutions like central banks and registered brokers by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation.
He tweeted, “Consumers who entrusted their assets to firms like FTX are discovering they have no protections when companies go bust. As Congress considers much-needed regulations for the crypto industry, I am laser-focused on ensuring real consumer protections.”
The American lawmaker requested the six mentioned crypto companies to provide transparent answers to questions such as the safety of consumer assets, defense against market manipulation, user data of customers, and subsidiary companies that may tamper the stability of the exchanges.
They must provide an answer to Wyden by December 12.
Authorities On FTX
Similarly, on December 13, the House Financial Services Committee will hold an investigational hearing into FTX. Maxine Waters, the committee’s chair, and Patrick McHenry, the ranking member, have both expressed support for the legislative action. McHenry has described the events surrounding the unsuccessful exchange as a “dumpster fire.”
Bankruptcy proceedings for FTX have recently begun in the District of Delaware, where it has been revealed that the exchange may owe more than a million creditors. The bankruptcy case’s next scheduled hearing is on December 16.
Previously, a couple of Democratic members of the US Senate asked the Department of Justice to investigate FTX and any involved individuals that have caused its collapse. Attorneys Merrick Garland, Kenneth Polite, Senators Sheldon Whitehouse, and Elizabeth Warren asked the DOJ to prosecute all incompetent personnel that has affected all the customers in the exchange.
All fingers point directly to former CEO Sam Bankman-Fried after his deleted tweet that said all the funds in the exchange were “fine” and created alibis regarding the liquidity controversy of FTX.
The DOJ has yet to investigate Bankman-Fried and the now-crumbled crypto exchange. Still, financial regulators all over the globe have begun their findings on FTX, especially in the Bahamas, where his company resided.
Crypto Exchange CEOs Regarding the Aftermath
Following the downfall of FTX, Coinbase CEO Brian Armstrong and Binance CEO Changpeng “CZ” Zhao had their statements.
Armstrong may have shown a neutral ground on Bankman-Fried, but after the bankruptcy, he said that the former CEO might have had ties with fraud and other malicious business practices. He also noted that the SEC is partly to blame for the bankruptcy due to its ongoing prosecution of the crypto industry.
Meanwhile, CZ, who declined Bankman-Fried’s call for help to buy out FTX, played a vital role before the rivaling crypto exchange’s collapse. He called out on Fried regarding the liquidity of his company which led to rising fears in the crypto community, especially the users under FTX. When the CoinDesk news came out along with CZ’s accusations, it ultimately broke Sam Bankman-Fried’s company. Now, CZ claims he wants to “rebuild” crypto by establishing a recovery fund to help struggling crypto projects in case of liquidity crises.