The collapse of FTX has caused regulators to start working on extreme regulatory measures against the cryptocurrency exchange worldwide. The case of the cryptocurrency exchange, which has shaken confidence in the ecosystem, might lead to further actions.
The cryptocurrency ecosystem has fallen into a stupor due to the collapse of FTX. The declined acquisition by Binance and the offer of Justin Sun to help have been among the initiatives to save the company.
However, regulators are unwilling to wait and have started to work on extreme actions against the cryptocurrency exchange. The Japanese Financial Services Agency (FSA) ordered FTX Japan to stop its operations. The measure forces it to stop offering all its services and keep its funds inaccessible in Japan.
The SEC Launches an Investigation into the CEO of FTX
The US Securities and Exchange Commission (SEC) has also looked into the case of FTX. They recently explained that they were launching an investigation into Sam Bankman-Fried, the CEO of FTX. The financial regulator reportedly wanted to know if the entrepreneur had violated the financial securities law.
The SEC had already looked into FTX.US but has extended the scope of its investigation over the last few days.
Since the SEC has always expressed hostility toward the sector, its arrival does not take anyone by surprise. Gary Gensler, the chairman of the SEC, recently stated that the cryptocurrency industry needed more regulation. It is relevant to remember that the regulatory agency of the Bahamas also froze the assets of the local branch of FTX.
The Californian Regulatory Agency Also Investigates the FTX Case
The first US state to react to the case was California, where the Department of Financial Protection and Innovation (DFPI) launched an investigation. They have invited local people affected by the collapse of the company to contact them to make their complaints.
Showing its determination to pursue the case, the DFPI said it took its oversight responsibility seriously. They pointed out they expected those companies offering financial securities in California to comply with their laws.
According to the White House, Joe Biden, the US president, also received information on the situation. Maxine Waters, the chairwoman of the Financial Services Committee, has also encouraged consumer protection measures within the ecosystem.
The Situation Worries the European Regulatory Agency
The Financial Stability Board (FSB), an independent group monitoring financial stability, recently issued an alert in Europe. After a meeting in Lisbon, they stated, without naming FTX directly, that the overall crypto industry requires urgent regulatory measures.
Representatives of the UK Treasury, the Central Bank of Sweden, or French and German financial institutions comprise the FSB. Therefore, the above is a warning that precedes more concrete measures in the European Union, which has not reacted officially.
The FTX Case to Trigger Further Regulatory Measures in the Sector
Since regulators are just arriving, the FTX case should trigger further regulatory measures worldwide. That crisis has weakened the confidence in the ecosystem among prominent figures like Jessy Powell, the CEO of Kraken.
Powell recently commented that the sociopathic behavior of a person seeking personal gains had risked the progress achieved by the sector over a decade. It will be hard for the crypto industry to prove its reliability to regulators due to the dramatic fall of FTX.
By Alexander Salazar
