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FTX Exchange Under Investigation

ftx exchange under investigation
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The FTX exchange is being investigated for mishandling consumer funds and violating securities regulations. Regulatory investigations were among the primary reasons Binance decided not to acquire the firm.

FTX exchange agreed to sell to Binance

After undergoing the cryptocurrency equivalent of a bank run, the crypto business decided earlier this week to sell itself to a larger rival, Binance. Customers abandoned the exchange after getting worried about their capital.

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Why is SEC investigating the FTX exchange?

The cryptocurrency market has been volatile, with worries over the company's financial stability leading to $6 billion in withdrawals in the 72 hours following Tuesday morning. Binance later announced a non-binding deal to purchase FTX's non-US business to address a "liquidity constraint" at the rival exchange.

According to the source, the SEC is also looking into the business's ties with its US equivalent FTX US and Chief Executive Officer Sam Bankman-Fried's trading firm. The SEC does not want to speak on the existence or nonexistence of a prospective probe, said an SEC representative. A CFTC spokeswoman declined to comment as well.

The crypto community's and securities authorities' inquiry into Bankman-Fried and his crypto company are centred on the potential that the firm utilised client deposits to support bets at Bankman-hedge Fried's fund, Alameda Research. Brokers in conventional markets are supposed to keep customer cash apart from other firm assets. Regulators can punish violations.

An individual acquainted with the FTX and Binance transactions described them as a "black hole" in which it was hard to distinguish between assets and liabilities. This individual said Bankman-Fried committed the "ultimate sin" by using custodial assets to support Alameda Research.

Gensler's view on FTX exchange

Under Democratic leadership, the SEC has increased its examination of the cryptocurrency industry. Chair Gary Gensler has already expressed concerns about whether crypto platforms effectively separate funds and if their market-making operations are trading against their clients.

Earlier this year, a cryptocurrency start-up BlockFi Inc subsidiary agreed to pay a record penalty to resolve allegations connected to its retail lending product. Other organisations, like FTX, enable users to "stake" certain cryptocurrency tokens in exchange for a return.

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Author: Emmanuel Baiden

Author: Emmanuel Baiden

7 years experience within the financial services sector most notably in Sales, Trading, research and writing articles within the crypto space. I have a bachelor's degree in International Business and a Master's in Investment and Risk Finance . I am also an associate member of the Chartered Institute for Securities and Investment.


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