Changpeng Zhao Believes “The Industry Is Healthier” After FTX Collapse, but Investigations Continue
Investigations into the FTX collapse continue around the world. At the same time, Changpeng Zhao, CEO of Binance, shared that such “nasty” events contribute to the industry’s health.
The story of FTX’s collapse continues to grow with new details emerging. For example, Arkham Intelligence analysts reported that Alameda Research withdrew $204 million in various cryptocurrency assets from FTX US accounts just before the active phase of the crisis. Earlier, John Ray III, who replaced SBF as CEO of FTX following its bankruptcy petition, stated a “complete failure” of corporate control of its finances and described the overall situation as “the worst I’ve seen in my career.”
The investigation into FTX Digital Markets continues in the Bahamas, which Ryan Pinder, Attorney-General and Minister of Legal Affairs of the Bahamas, announced. He said the investigation is both civil and criminal in nature. The Securities Commission, the Financial Intelligence Unit, and the Royal Bahamas Police Force’s Financial Crimes Unit are involved.
The bankruptcy of FTX led to very negative consequences for the socio-economic situation in the Bahamas. The Wall Street Journal reported this. According to the report, every week, FTX spent about $100,000 on food for employees and provided them with transportation and accommodation. As a result, after the company’s sudden bankruptcy, many local residents lost their jobs and income.
Investigations into FTX continue in other countries. Thus, the Financial Crimes Investigation Board in Turkey seized the assets of Sam Bankman-Fried. Turkish investigators found that FTX did not provide the safe custody of user funds, some of them embezzled funds through shady transactions, as well as manipulated the supply and demand in the cryptocurrency market. More than 110 thousand people used the services of FTX TR and the monthly turnover of funds reached $600 million.
In Singapore, Workers Party MPs are demanding that the government inspect the investment activities of the Sovereign Wealth Fund (GIC) and state-owned Temasek Holdings, Asia’s largest investment vehicle, according to Channel NewsAsia. Singapore’s state-owned companies invested $275 million in FTX structures in October 2021.
The U.S. authorities are also continuing to investigate SBF entities, and the debate over it is going public. For example, congressman Tom Emmer, in a commentary on FOX Business, blamed SEC Chairman, Gary Gensler, for the collapse of FTX. The congressman also recalled the SEC chief executive’s rumors that FTX could be given special regulatory treatment and, at the same time, blamed the official for the collapse of Terra, Celsius Network, and Voyager Digital. Gary Gensler will now address the U.S. House Committee on Financial Services and answer questions about the SEC’s role in the cryptocurrency industry.
The investigation by U.S. government agencies has extended to Genesis Global Capital, which was affected by the FTX collapse. Joseph Borg, director of the Alabama Securities Commission, said this in a commentary to Barron’s. According to the official, several states are involved in the investigation, and the purpose of the measures is to identify violations of securities laws by the company. To recap, Genesis is an entity of Digital Currency Group, whose problems could affect the cryptocurrency market much more significantly than the collapse of FTX.
In a recent interview with Fox News, Bitcoin Foundation Chairman, Brock Pierce, stated his opinion that the collapse of FTX revealed “the biggest scandal of my lifetime.” In his opinion, incompetence and lack of transparency were the main reasons for the situation. However, he believes that “bad actors help the system evolve and get better.”
Changpeng Zhao, CEO of Binance, offered a similar opinion. At the Binance Meet-up in Athens, he said that thanks to all the events that made 2022 “nasty,” “the industry has become healthier.” Recall that the head of Binance most likely had a hand in pushing FTX into bankruptcy.