- Armstrong blamed SEC for the absence of regulatory clarity in the country
- It drove the majority of trading activity to offshore exchanges
Brian Armstrong called US regulators’ decision to probe FTX.US, Binance.US, and Coinbase in the wake of the FTX crisis senseless, CoinTelegraph reported.
According to the Coinbase CEO, it makes no sense to take action against US-based companies for acts committed by FTX, which is an offshore crypto exchange outside the jurisdiction of US regulators.
Lack of regulatory clarity drove trade offshore
The Coinbase CEO’s comments were in response to a call from notoriously anti-crypto Senator Elizabeth Warren for “aggressive enforcement” after the FTX crisis.
Armstrong blamed the Securities and Exchange Commission (SEC) for the absence of regulatory clarity in the country, which he feels drove the majority of trading activity to offshore exchanges. He believes it makes no sense to punish US companies for this.
Comparison to Singapore
According to Ripple CEO Brad Garlinghouse, whose company is being sued by the SEC over a securities issue, the US needs more guidance, like crypto firms have in Singapore.
He finds that companies have no compliance guidance in the US, unlike in Singapore, which has a clear tax economy and licensing framework. This makes compliance much easier. He said:
Compare that with Singapore which has a licensing framework, token taxonomy laid out, and much more. They can appropriately regulate crypto because they've done the work to define what “good” looks like, and know all tokens aren’t securities (despite what Chair Gensler insists).
FTX collapse caught US regulators’ attention
When the third-biggest crypto exchange collapsed, US regulators started paying close attention. The SEC and the US Department of Justice have launched an investigation into the exchange’s US subsidiary according to a recent report.
The watchdogs are looking at whether some of the exchange’s crypto lending products might qualify as securities. They are also investigating its connections with the parent company with head office in The Bahamas.
Their time was up
FTX was one of the biggest crypto exchanges worldwide with millions of users. Until January this year, it raised billions in numerous funding rounds. Despite extreme crypto market volatility in the second quarter of 2022, FTX emerged unscathed, even lending many crypto loan providers a helping hand.
Binance rescue deal fell apart
The rescue deal with Binance fell through within 48 hours of the announcement that FTX was accused of mismanaging user funds and using FTT, their own native token, as collateral. Reportedly, FTX CEO Sam-Bankman Fried has asked for emergency funding of $8 billion from investors.
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