Senator FTX Collapse Hearing: US Lawmakers Examine Crypto Industry

The senate committed a hearing to examine the collapse of the FTX cryptocurrency exchange of November 2022 and its impact on the customers and the industry. The lawsuits of the US pass the legislation that imposes strict rules on a cryptocurrency exchange. The regulations include limiting or prohibiting the conflicts of interest that contributed to FTX’s collapse. 

Mr. Behnam said before the senators on the senate Agriculture committee which declares that he was still in favor of legislation that would empower his small agency to regulate the trade of commodities which includes bitcoin, ether, and other digital assets. The founder Sam Bankman-Fried also advocated in favor of the law before the company collapsed last month.

The bill’s endorsement by FTX raises concerns about its control over it. The securities and exchange commission, which has the power to enact tighter regulations that the majority of crypto firms oppose, was not viewed by FTX as being a friendly regulator and was instead seen as being in charge of overseeing the cryptocurrency market.

Senate Hearing On FTX Collapse Scrutinises Crypto Industry

The main cause of the collapse of Mr. Banknam-enpire Fried was the allegations that his exchange. FTX mishandled of customer’s cash by giving it to the associated trading company, Alameda Research, which made risky venture investments.

Mr. Bankman-fried claimed in the recent interviews that he lacks risk management at FTX, but he denied being aware about the customer’s money is misused.

Each hearing, witnessing many highly reputed personalities which include actors and crypto skeptic Ben McKenzie Schenkkan and the personality of  “SharkTank” and FTX investor Kevin O’Leary said that the authority believes that there are likely more frauds who practice illegal activities in the crypto world is to be found, no matter they are from any range of industry.

Allen said that Sam Bankman-Fried and the rest of the crypto industry were not looking for clarity on the current law further looking for changes in the law that would accommodate the crypto industry. 

Hilary Allen an American University law professor claimed that without U.S regulation, the value of the crypto investment which includes all the products could disappear. 

Mr. Stabenow said that when the exchanges accept customers’ money for trading, they should be restricted to use the money and gambling with it. The product they invented which has less or no intrinsic value should not be allowed and accepted as collateral for the loan. 

The bill which was written by Mr. Stabenow and Sen. John Boozman (R., Ark.), the committee’s ranking member, decided to bring regulations in the trading of bitcoin, ether, and other cryptocurrencies. 

Many other lawmakers proposed alternative legislation which focuses to regulate certain parts of the crypto space. Elizabeth Warren who is a senator and a well-known skeptic of cryptocurrency in congress focused to push the association between the financing of terrorism, digital assets, and ransomware payment.  

>Related: Binance CEO Zhao Dismisses Worries Over The $2.1 Billion FTX Clawback

Pat Toomey a Pennsylvania senator expressed his support for the US when introducing the digital dollar, and made a comparison between cryptocurrency and software rather than the currencies. He argued that banning digital assets won’t be the solution to the problems that led to FTX’s financial issues. 

Other investors like Jenneifwer Schulp and Kevin O’Leary mentioned the sentiments of many lawmakers saying that crypto wasn’t entirely to blame for FTX’d demise, but rather unrestricted companies in charge of user assets. 

 Following the hearing of the senate agriculture committee on December 1 and the hearing of the house financial services committee on December 13, this was the third hearing which explores the FTX collapse. The house committee said that plans are in the process to hold a second hearing on FTX sometime in 2023.