Coinbase CEO Brian Armstrong has expressed displeasure at the SEC’s investigation of FTX, saying SEC’s unclear regulations have driven 95% of trading activities offshore.
Unclear regulations drove 95% of trading activities offshore – Coinbase CEO
Brian Armstrong, founder and CEO of popular cryptocurrency exchange Coinbase has frowned at the United States Security Exchange Commission (SEC) for its investigation of three prominent crypto exchanges in the wake of the FTX Crisis. In a tweet earlier today, November 10, Armstrong blamed the SEC for its unclear regulations forcing about 95% of offshore crypto trading activities.
According to Armstrong’s tweet, the SEC’s enforcement of action against US-based companies for the instability of an offshore crypto exchange makes no sense.
“FTX.com was an offshore exchange not regulated by the SEC.
The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore.
Punishing US companies for this makes no sense.”Coinbase CEO tweeted.
Armstrong’s tweet responded to Senator Elizabeth Warren’s call for more aggressive regulation of crypto platforms. According to the democratic US senator, the recent FTX crisis brought to light the need for urgent enforcement in the crypto industry.
“The collapse of one of the largest crypto platforms shows how much of the industry appears to be smoke and mirrors. We need more aggressive enforcement and I’m going to keep pushing @SECGov to enforce the law to protect consumers and financial stability.”Warren wrote.
SEC and DOJ are investigating FTX and two other crypto exchanges
According to an article in Senator Warren’s tweet, The US Securities and Exchange Commission and Justice Department are investigating FTX after its sudden implosion this week. As reported by WSJ, the ongoing probe focuses on potential securities-law violations by U.S. affiliates.
According to the press release, The SEC’s investigation of FTX has continued for months and is focused on the company’s U.S. subsidiary, FTX.US, which lists dozens of crypto tokens. SEC officials believe some of these assets, as well as FTX’s lending product, might constitute securities that, under U.S. law, should have been registered with the SEC before being sold to investors. In such cases, the company’s handling of customer assets might also violate laws governing U.S. exchanges.
In an event hosted Wednesday, November 9, 2022, by the Healthy Markets Association, Gary Gensler, Chairman of the Security Exchange Commission, said:
“We will continue to do our job as a cop on the beat. The runway is getting shorter for some of these intermediaries, I have to say.”
As part of the expanded investigation, SEC officials have contacted company lawyers to request more documents about the relationship between FTX.US and the parent company, based in the Caribbean. The person said they have also sought information about ties between FTX’s crypto exchange and its founder’s trading firm, Alameda Research.
The SEC is not only after FTX; according to Wall Street Journal, the commission is also investigating the world’s largest cryptocurrency exchange platforms, Binance and Coinbase. In response to the SEC ruling that issuers of securities must file regular disclosures about their financial condition and business, Coinbase has denied that it lists securities on its platform. FTX founder Sam Bankman-Fried has spent tens of millions of dollars on political campaigns and much of his time attempting to persuade U.S. lawmakers to change the statutes that the SEC enforces.