The head of the Securities and Exchange Commission cautioned Americans about the risks of investing in the lightly regulated cryptocurrency industry Thursday, a dire warning as one of the largest crypto exchanges FTX goes up in flames.
Key Background
FTX’s fall from grace happened in a matter of days, with the exchange experiencing a run of withdrawals early this week after Binance CEO Changpeng Zhao expressed concerns about insolvency concerns at his rival. Binance entered an agreement to acquire FTX on Tuesday before bailing a day later, explaining the liquidity “issues are beyond our control or ability to help.” The one-time industry titan FTX dragged down the rest of the crypto market with it, sending the largest coins, bitcoin and ether, down 18% and 21% this week, respectively, while Coinbase shares tanked 23%.
When reached via text by Forbes about him dropping from our list of billionaires, Bankman-Fried offered his first public comment since the Binance deal went haywire: “Hey, not totally clear but certainly can’t confidently dispute, will update later if new info comes out…”
Chief Critic
“It’s unbelievably frustrating that we basically have a situation that looks like Theranos,” Galaxy Digital CEO Michael Novogratz told CNBC Thursday, referring to the infamous multi-billion dollar biotechnology firm founded by Elizabeth Holmes that was later revealed to be fraudulent. Novogratz’s firm held $77 million in assets at FTX, money the investor said he’s unsure he’ll ever see again.
This article was first published on forbes.com
Binance Bails On FTX Acquisition — Here’s What Led To The FTX Crypto Crash (Forbes)