by Fintech Express | Jan 30, 2023 | Regulation
FTX did not convince the ASIC of its operations. New details show that the exchange had been served 3 notices in eight months. The surfaced report claims that the ASIC had warned about the exchange in March, the first month it began operations there.
FTX was a huge red flag
The ASIC has been shown to express concerns about the Australian FTX subsidiary eight months before the November collapse. Via documents accessed by Guardian Australia, the regulators were concerned about how the exchange conducted its business there after obtaining an operation license via a company acquisition.
After taking over IFS Markets in December, the exchange acquired the operational license in 2021. However, it only opened for business months later, in March 2022. The ASIC noted red flags in how the exchange operated its newest entity as soon as it began operations there.
The documents obtained by Guardian Australia show that the ASIC issued a section 912C notice to FTX in March, requiring it to provide information about its operations to assess if it was meeting the AFSL license requirements. Such a notice allows the ASIC to monitor the kind of financial services the licensee engages in and determine if the person is fit to hold it.
The report by Guardian Australia confirmed that the ASIC and FTX engaged for several months, with three notices being issued to the exchange in the process. However, the operations of the business remained the same. Reports have it that the ASIC was still concerned by the exchange’s operations till late October.
Is ignorance what’s fanning crypto meltdown fires?
The ASIC had seen the red flags in the operations of the FTX subsidiary in the country but did not take any legal action like bans or fines. The ASIC is not the only regulatory body that has had clashes with FTX.
Recently, the CFTC expressed that it was concerned with venture capitalists (VCs) not taking charge of how their money was working in FTX. It said that it would make arrangements to question those VCs and figure out whether they ignored FTX red flags or needed to make an effort to know how their investments were fairing.
FTX is not the only meltdown that shows a great level of ignorance in the crypto space. Other organizations like Terra and crypto lenders like BlockFi and Celsius were never reported before they collapsed. That shows the lender never quite struck deals that allowed them to monitor how their investments were fairing or didn’t even care.
As such, it calls for all stakeholders in the financial sector to be vigilant and more active in streamlining financial vehicles like crypto and stocks. Keep watching FintechExpress for crypto and other finance-related news.
by Fintech Express | Jan 21, 2023 | Regulation
CFTC commissioner has revealed that FTX VCs will be included in a series of serious grilling regarding the ongoing FTX case. The commissioner said that the management at FTX was questionable and raised many eyebrows. Now, the CFTC want’s to unearth what was going on there.
FTX official’s grilling continues
The efforts by US regulators and prosecutors to grill the Executives at the now-bankrupt crypto exchange FTX aren’t slowing down. The CFTC commissioner has revealed that they have been disturbed by several questions regarding how the exchange operated.
Now, they want to question the VCs to learn more about the exchange’s lack of records, as John Ray III revealed in 2022. John Ray is the current FTX liquidations CEO. In a 2022 US Congress hearing, John Ray made several bold reveals surrounding the findings of his liquidations team.
One of the major issues was that FTX did not have record-keeping whatsoever. The exchange also had an auditor not yet heard of, which raised many eyebrows. Amid the ongoing investigations against Bankman-Fried, the CFTC questions how venture capitalists (VCs) operate in crypto.
CFTC Commissioner questions the role of crypto VCs
In an interview with Bloomberg, the CFTC Commissioner Christy Goldsmith Romero said he needs help figuring out how VCs could run down their investments to near zero. What’s sensible is that the VCs should have done better by following up on how their million-dollar investments in the exchange were doing.
She explained that the VCs must have ignored the red flags surrounding the operations at FTX. She particularly questioned the possibility of conflicts between the VCs from paying attention to the facts they were uncovering. Since that seems highly improbable, they will need sittings with the CFTC to explain why they did not report any anomalies.
What Goldsmith Romero said sums up a growing sentiment in the crypto space that crypto stakeholders have neglected their roles. The industry is in chaos due to stakeholders failing to perform their duties as expected.
One key player who backed this sentiment is shark tank star Kevin O’Leary. O’Leary said that the fall of another exchange is imminent as long as the regulation is not in place. Keep watching FintechExpress for finance news to be updated as soon as they happen.
by Fintech Express | Jan 21, 2023 | Regulation
Bankman-Fried, FTX Ex-CEO, and founder will lose assets worth $700M if he is found guilty of fraud during his upcoming trial. Bankman-Fried was arrested in the Bahamas and extradited to the US, facing multiple counts of fraud and breaking banking rules.
Bankman-Fried might lose his possessions
Sam Bankman-Fried might lose his possessions which currently stand at around $700M, a fall from over $10B if he is found guilty of eight counts of fraud. He is accused of misusing customer funds at FTX, making the exchange end up collapsing.
Allegations detail that he siphoned the money via Alameda Research, a company he had founded before FTX. The allegations are that he spent the funds on personal expenses.
Per a Friday court filing in the Southern District of New York, US Attorney Damian Williams said that 10 bank accounts, some shares, cash, and crypto holdings are among the possessions that Bankman-Fried will forfeit if he loses the trials.
The US already has its hands on Bankman-Fried’s accounts and shares
The asset pool the US prosecutors are eyeing includes highly contented 55 million Robinhood shares. These shares are priced at around $526M. They were bought via a loan from Alameda research and collateralized on another loan from BlockFi.
Bankman-Fried, BlockFi, and the FTX liquidation team have been contending to repossess them. However, the Department of Justice previously announced it had seized them. Other assets that are Bankman-Fried might forfeit over $20M held in an account under the name Emergent Fidelity Technologies.
Emergent Fidelity is a holding company that Bankman-Fried used to purchase shares. The court filing also explained that the Department of Justice was in reach of another $171M deposited under the name FTX Digital Markets in three Binance accounts. It explained that the possessions were collected between Jan.4 and Jan 19.
Elsewhere the authorities are increasing their efforts by cracking down on risky crypto exchanges. The US recently arrested Bizlato’s founder and closed down that exchange. South Korean regulators have also issued an arrest warrant for Do Kwon, ex-CEO of Terra Luna ecosystem.
Terra Luna collapsed in Mid 2022 due to shady management, and arrests have also been made. Keep watching FintechExpress for crypto regulation and other finance-related news.
