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FTX’s collapse shows regulation is needed ‘before the next crypto disaster cripples our economy’ warns Elizabeth Warren

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  • Elizabeth Warren warned on Tuesday that FTX’s bankruptcy demonstrates the need for crypto regulation.
  • “The FTX explosion should be a wake-up call. Regulators need to enforce the law before more people get scammed,” he said.
  • Warren criticized the use of crypto for money laundering and its high environmental costs.

According to Elizabeth Warren, the sudden explosion of FTX shows that proper crypto regulation is needed before the digital asset causes widespread economic damage.

Financial watchdogs must intervene in the space to protect retail investors after the sudden collapse of the Sam Bankman-Fried stock exchange wiped out at least $1.7 billion in client funds, a Massachusetts senator said Tuesday. Is.

“The FTX explosion should be a wake-up call,” he wrote in an op-ed in the Wall Street Journal. “Regulators must enforce the law before more people are scammed, and Congress must fill the remaining holes in our regulatory framework – before the next crypto catastrophe brings our economy down.”

FTX filed for bankruptcy last week after rival exchange Binance flagged its holdings of the group’s FTT tokens, sparking a solvency crisis.

FTX’s new CEO, John Ray III, said in a Chapter 11 filing published Nov. 17 that the group’s total crypto holdings were just $659,000 instead of the $5.5 billion claimed by Bankman-Fried — and that he had “significant concerns” about their financial statements. ” Used to be .

Warren compared the events of the past week to the 2008 financial crisis, saying that crypto is “following a miserable path of financial innovations, such as subprime mortgages and credit-default swaps, which began with staggering rewards.” And ended up with serious losses.”

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In addition to protecting retail investors, Warren also wants to look into crypto money laundering regulations. According to Warren, terrorists, drug dealers and ransomware criminals can “conceal their illegal activities by trading billions of dollars in cryptocurrencies in complete anonymity”.

She also wants to see a reduction in the industry’s high pollution levels: “Crypto mining companies that pollute and overload the power grid should be required to disclose their emissions and energy consumption to the public. The Department of Energy has access to these disclosures.” has the tools he needs, but if he doesn’t want to use them, Congress needs to step in.”

Read more: FTX’s bankruptcy filing shows that the situation is much worse than anyone thought. From a million creditors to a surprising lack of oversight, here are the craziest details.

Source: markets.businessinsider.com

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