Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), warned the crypto industry, saying, “We need to protect crypto investors. Time is running out!” According to Gensler, the FTX collapse follows the same pattern as the crash of many other crypto platforms. He said that these platforms use customer funds to borrow and then use them to make further investments without disclosing accurate information about the transactions.
“When you mix a bunch of customer funds and take out loans to do that, investors are harmed.” After Binance abandoned plans to acquire Sam Bankman-Fried’s struggling crypto company, FTX is on the verge of collapse. According to some people familiar with the matter, Sam Bankman-Fried told investors that FTX was facing an $8 billion liquidity gap due to withdrawals and needed emergency funding.
As the Wall Street Journal reported, CNBC’s Andrew Sorkin interviewed Gensler and asked him if the SEC wanted to open an investigation into FTX. The latter answered Sorkin’s question in the affirmative.