Rep. Ritchie Torres, a US lawmaker, sent a letter to the federal legislative watchdog, the United States Government Accountability Office (GAO), requesting to investigate the Securities and Exchange Commission’s (SEC) oversight of the recently collapsed cryptocurrency exchange FTX.
Torres questions the SEC’s “failure to protect the investing public from the egregious mismanagement and malfeasance of FTX_Official.” He also criticized SEC’s chairman Gary Gensler.
According to the letter’s statement:
Chair Gary Gensler, by the logic of his own public pronouncements, is singularly responsible for the regulatory failures surrounding the collapse of FTX and its affiliate FTX US.
Torres further noted that many times, Chair Gensler has stated that the SEC already has the authority necessary to oversee cryptocurrency exchanges, negating the necessity for congressional authorization.
He argues that if the SEC had such power as Gensler claims, “why did he fail to uncover the largest crypto Ponzi scheme in US history.” However, it’s up to Congress to legislate, but once they do, it is up to regulatory agencies such as these to protect the public.
SEC Chair Gensler Is Responsible For FTX Collapse
According to Torres, Gensler can’t argue for power and neglect responsibility at the same time. He “fundamentally failed as a regulator, and he has no one but himself to blame” regarding the FTX crash.
The letter also highlights that many are questioning the efficiency and apolitical nature of the SEC. The SEC’s top priority should be protecting investors, not gaining media attention by investigating celebrities who make appearances in front of Congress or shareholders.
If the SEC had done the due diligence of thoroughly investigating the financials of FTX, there would have been a greater likelihood of exposing the crypto exchange for what it truly is: a house of cars built on monopoly money printed out of thin air.
However, an independent evaluation is required and warranted, in Torres’ opinion, given the severity of the regulatory failure related to the FTX debacle.
On the other hand, in an interview with Yahoo Finance, Gensler said that the bankrupt FTX had broken securities rules by utilizing client funds to trade at its associated hedge fund, Alameda Research.
He claims that some crypto platforms are asking the SEC to continue allowing them to offer loans, trade in assets, and operate as an exchange while running a hedge fund, “We have said, no, you have to separate it out.”
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