During DC Fintech Week, U.S. Securities and Exchange Commission Chair Gary Gensler discussed the potential reboot of FTX, a leading crypto exchange. His comments sparked a rally in FTX’s digital token, FTT. Gensler emphasized the importance of operating within the bounds of the law and building trust with investors by ensuring proper disclosures and avoiding conflicts of interest.
Gensler’s Call for Compliance and Transparency
Gensler urged individuals like Tom Farley, former president of the New York Stock Exchange and CEO of Bullish, to enter the crypto field with adherence to regulations. He stated, “If Tom or anybody else wanted to be in this field, I would say do it within the law. Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures – and also that you’re not comingling all these functions, trading against your customers, or using their crypto assets for your own purposes.”
- Rallying FTT
Following Gensler’s remarks on the future of FTX, FTT experienced an impressive 84% surge. However, it is essential to note that FTT is still below its value from two years ago, indicating ongoing challenges in the crypto market.
FTX Founder’s Legal Troubles
Gensler’s statements came shortly after Sam Bankman-Fried, the founder of FTX, was found guilty on all seven charges in a landmark federal fraud case. Bankman-Fried was implicated in misusing funds, with over $8 billion misappropriated, resulting in FTX’s collapse in November 2022.
- A Lesson in Corporate Controls
The severity of Bankman-Fried’s actions was emphasized by attorney John Jay Ray III, known for his successful efforts in returning funds to creditors of a former American energy company. Ray described the situation as a “complete failure of corporate controls” and applauded the ongoing efforts to rectify the situation.
Tim Enneking, the Managing Partner at Psalion and CEO of Presearch.com, Inc., commended Ray’s work, stating, “It was an $8 billion hole, and he’s doing a masterful job of filling it.”
- A Hopeful Future for FTX
Currently facing bankruptcy, FTX is expected to rebound under new leadership. Three bidders, including Tom Farley, have expressed interest in taking over the reins of the crypto exchange once it emerges from bankruptcy next year.
An amended settlement plan, subject to approval by the U.S. Bankruptcy Court, offers hope to FTX customers. If approved, they could receive “over 90% of distributable value worldwide” in recovered funds.
A Call for Compliance and Consequences
Gensler emphasized the need for compliance within the crypto industry. He sternly warned individuals engaging in illicit activities to “cut it out” and highlighted the importance of adhering to international sanctions and anti-money laundering laws.
Bankman-Fried’s defense team plans to appeal the verdict, and his sentencing is scheduled for March 2024.
