Along with other lawmakers, US Treasury Secretary Janet Yellen also spoke about the need for “more effective oversight of cryptocurrency markets” post the collapse of the FTX exchange.
By Bhushan Akolkar
Updated
3 mins read
Next month in December, the House Financial Services Committee said that it will hold a hearing on the collapse of the crypto exchange FTX and its broader implication on the entire crypto industry.
The Committee is expecting to hear from “the companies and individuals involved, including Sam Bankman-Fried, Alameda Research, Binance, FTX, and related entities, among others”.
Speaking on this development, Rep. Patrick McHenry, R-N.C., the top committee Republican, said: “Oversight is one of Congress’ most critical functions and we must get to the bottom of this for FTX’s customers and the American people. It’s essential that we hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system.”
McHenry shall be taking charge of the House committee next year in 2023. In the meanwhile, the current chair of the House Committee – Rep. Maxine Waters, D-Calif – said that the fall of FTX has impacted more than one million users. “Unfortunately, this event is just one out of many examples of cryptocurrency platforms that have collapsed just this past year,” she added.
Along with other lawmakers, US Treasury Secretary Janet Yellen also spoke about the need for “more effective oversight of cryptocurrency markets” post the collapse of the FTX exchange. In response to President Biden’s executive order on digital assets this September, the Treasury Department submitted a few reports.
Secretary Yellen said that if the reports were turned into policy, the calamity could have been prevented. Yellen said:
“Some of the risks we identified in these reports, including comingling of customer assets, lack of transparency, and conflicts of interest, were at the center of the crypto market stresses observed over the past week”.
In a Twitter thread on Wednesday, November 16, FTX chief Sam Bankman-Fried admitted to being careless and over-confident while building his $32 billion empire. Last week, the crypto exchange spiraled into a liquidity crisis amid heavy withdrawals from the exchange. This led to the company ultimately filing for Chapter 11 bankruptcy.
In a tweet yesterday, he wrote:
“I was on the cover of every magazine, and FTX was the darling of Silicon Valley”.
He further added that “problems were brewing” that was “larger than [he] realized”. He also added that he thought that the exchange had built up to $5 billion of leverage while the actual leverage was more than $13 billion.
“Roughly 25% of customer assets were withdrawn each day -$4b. As it turned out, I was wrong: leverage wasn’t ~$5b, it was ~$13b. $13b leverage, total run on the bank, total collapse in asset value, all at once. Which is why you don’t want that leverage,” added he.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
