WASHINGTON, December 14, 2022 – Senators amid legislators’ growing hostility to digital assets following the FTX meltdown. Pat ToomeyPennsylvania, defended the industry at a Senate Banking Committee hearing on Wednesday.
FTX, a highly regarded cryptocurrency exchange until recently, suffered a severe liquidity crisis and subsequently filed for bankruptcy in November. The crisis was sparked by reports that Alameda Research, an investment firm associated with FTX, relied heavily on FTX’s internal token, FTT.
Since its demise, intense scrutiny has revealed that FTX improperly funded Alameda’s business with billions of dollars of client investments.Bahamian Authorities Arrest FTX Founder and Ex-CEO Sam Bankman-Fried On Monday, he could face extradition to the United States.
Toomey, a senior member of the committee, rejected the suggestion that:pauseHalt cryptocurrency trading until a comprehensive regulatory scheme becomes law or circumvent digital asset regulation altogether to prevent further legalization of digital assets. Toomey advocated enacting consumer protection and disclosure requirements. This will enable healthy innovation in the cryptocurrency industry.
“With FTX, the problem was not the instrument used (the digital asset), the problem was misuse of customer funds, gross mismanagement, and possibly illegal activity,” Toomey said.
“The 2008 financial crisis included a clear misuse of mortgage-related products,” Toomey reasoned. “Did we decide to ban mortgages? Of course not.”
Several senators have blamed the loss the FTX collapse has done to investors. Elizabeth Warren,D Massachusetts expressed concern that cryptocurrencies are a favorite tool of terrorists, rogue states, and other nefarious actors.When Roger MarshallR-Kan., Warren on Wednesday sponsored a bill targeting money laundering in the crypto space.
Jennifer ShulpDirector of Financial Regulatory Studies at the Center for Finance and Financial Alternatives at the Cato Institute and a witness at the hearing told Broadband Breakfast that Warren ignored the small relative scale of crypto-related money laundering. Told.Fraudulent accounts only 0.15 percent According to Schulp,
Witnesses hear banks clash with cryptocurrencies
to testify before the committee, Hillary J. Allen, a professor at the American University of Washington Law School advocated banning crypto entirely. Instead of such a ban, she urged policymakers to ban banks from investing in cryptocurrencies. That way, she said, the traditional financial system would be protected from cryptocurrency volatility. “There is little to lose by limiting the growth of the crypto industry,” Allen argued, noting that blockchain technology is “not very good.”
Kevin O’Leary,Investor shark tank Fame later told the commission that preventing banks from holding crypto could render America’s financial institutions impotent. If such a ban were enacted, O’Leary said, “As an investor, I would be shorting U.S. bank stocks because it would be the least competitive financial services sector in the world.”
Sam Bankman-Fried Indicted, New CEO Testifies
The U.S. Attorney’s Office for the Southern District of New York has filed an indictment indicting Bankman-Fried for eight counts of fraud. On Tuesday, the Securities and Exchange Commission and the Commodity Futures Trading Commission also filed a lawsuit against the founders of FTX.
New CEO of FTX, John J. Ray IIIBankman-Fried appeared before the House Financial Services Committee on Tuesday for a hearing scheduled to testify before his arrest.
“This is just plain old-fashioned embezzlement. This is just taking money from customers and using it for their own ends,” Ray testified. It was probably sophisticated in that it was able to hide it from people.”