Crypto News: Congressman Bill Posey asked questions at SEC Chairman Gary Gensler’s House Financial Services Committee hearing about the investigation into the November 2022 collapse of crypto exchange FTX. Earlier at the hearing, Committee Chairman Patrick McHenry specifically asked in Gensler’s view on whether Ethereum (ETH) is a security or commodity. This question directly addressed growing concerns about crypto regulation ambiguity and strong enforcement action.
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Worrying before FTX collapses
Congressman Posey took over a discussion about crypto companies merging various business functions and asked the SEC chairman if he was concerned about FTX operations before it collapsed. In response, the chairman of the US Securities and Exchange Commission (SEC) said there were concerns about the merging of functions such as the stock exchange, broker-dealer and hedge fund functions. Congressman Posey responded to this, asking, “With those concerns, have you directed your staff to look into it?”
It may be recalled that as the FTX collapse unfolded in November 2022, it was alleged that the SEC was working with Bankman-Fried on a bargaining agreement. It was said that Sam Bankman-Fried’s mother probably contacted Gensler. If proven true, this claim could prove fatal to SEC staff in the wake of developments in the Congressional hearings. Gensler said at the Congressional hearing that the SEC had filed a number of actions regarding Sam Bankman-Fried over the number of Securities Act violations.
When asked when he thought FTX was problematic, he said the actions against FTX were filed in December 2022. The SEC was accused at the time of being very slow in initiating actions against FTX given the huge market losses.
“We filed follow-up actions in January 2023 because it takes time to prepare an investigation file. We have always maintained that our goal is to bring them (crypto companies) into line and stop merging different functions – stop using client funds.
Informing investors about FTX impact
Bill Posey asked the SEC Chairman how long after the SEC met with FTX, he informed the public and investors of the potential risks. Gensler clarified that details of the SEC investigation are kept confidential to protect the integrity of the ongoing investigation. “We protect everything we do as part of our research and keep it confidential because it’s important to the integrity of the research and respecting people’s privacy.”
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Anvesh reports major developments around crypto adoption and trading opportunities. He has been associated with the industry since 2016 and is now a strong advocate for decentralized technologies. Anvesh is currently based in India. Contact him at [email protected].
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This post Gary Gensler grilled on SEC FTX probe timeline at hearing
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