The fallout of the FTX exchange will be widespread as the year of the crypto transition continues. Industry leaders are citing the lack of regulations in the US for the incident.
Millions of retail and institutional crypto traders have lost money this week. The world’s second largest centralized crypto exchange, FTX, has collapsed after a cascade of withdrawals that could not be resolved.
On November 10, anti-crypto Senator Elizabeth Warren angrily took to Twitter. She added that much of the cryptocurrency industry “appears to be smoking and mirroring”, while calling for “more aggressive enforcement”.
In response, Coinbase CEO Brian Armstrong explained that FTX.com was an offshore exchange that was not regulated by the SEC. He said the SEC has failed to create regulatory clarity in the United States. As a result, many US investors and 95% of trading activity went offshore.
“There is no point in punishing American companies for this,” he said.
Regulatory Crackdown Incoming
Coinbase exchange head Vishal K Gupta said that the US crypto market makes up less than 5% of the total market volume. “Lack of clear and fair regulation has driven crypto trading offshore,” he said.
Robert Leshner, founder of Compound Finance Told That FTX founder Sam Bankman-Fried was advocating for stricter regulations on DeFi.
“The SBF lobbied for months to kill DeFi, because it knew that the transparent autonomous protocol “trust me that the asset is okay” was a threat to finances.
crypto analyst Zack Voel AgreedPointing out the irony.
“The guy who had spent countless hours in DC lobbying for tighter DeFi regulation, as well as handing out a handful of CEFI products to his customers.”
Binance CEO Changpeng ‘CZ’ Zhao said that the collapse of FTX has “severely shaken” the crypto industry. He said this would lead to stricter scrutiny by regulators.
No winner from FTX result
Everyone will lose out on this incident, as it has given global regulators the ammunition they need to work harder on the industry. “Regulators will investigate exchanges even more. It will be harder to obtain licenses around the world,” CZ told its employees.
On November 9, Binance pulled out of the FTX bailout deal, in which it would provide liquidity to help the embattled exchange. company Cited “Latest news reports about misappropriated client funds and alleged US agency investigations” as a reason for the withdrawal.
In response to the FTX failure, Binance has created a secure asset fund for its users.[SAFU]has been raised again to $1 billion.
Meanwhile, the cryptocurrency market fell to the bottom of a new bear cycle. The overall market capitalization dropped by 10% as more than $100 billion was inflow in less than 24 hours. As a result, this figure currently stands at around $850 billion, down 72% from the high at this time last year.
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