Exclusion from US crypto industry over FTX crisis ‘irrational’: Coinbase CEO
Exclusion from US crypto industry over FTX crisis ‘irrational’: Coinbase CEO. Coinbase CEO Brian Armstrong responds to Elizabeth Warren’s call for aggressive SEC enforcement amid FTX failure.
The head of Coinbase hit back at calls for stricter regulation of US crypto companies due to FTX’s lack of liquidity, saying it was “nonsensical” given that many crypto companies are host-dependent. His comments came after Senator Elizabeth Warren, who is an outspoken critic of the crypto industry, tweeted on Wednesday that the FTX crisis showed how the industry “seems to be smoke and mirrors.”
He added that he “needs aggressive enforcement” and will continue to push the Securities and Exchange Commission (SEC) “to adopt rules to protect consumers and financial stability.”
Coinbase CEO fears FTX crisis will wreak havoc on cryptocurrency exchanges
But Coinbase co-investigator Brian Armstrong said that the SEC itself is a problem, because it “did not make the law clear here in the United States, so many American investors (and 95% of business operations) went overseas”.
Since FTX operates overseas, it is not regulated by the SEC, and Armstrong adds that “punishing an American company for this makes no sense.”
FTX does not allow US residents to trade on its platform, but operates a separate exchange for them, FTX US.
But the company regularly finds itself in the discussion of US regulators, with the SEC, Department of Justice and the Commodities and Futures Trading Commission indicating that they are investigating the aid. The investigation by the SEC and the CFTC began a few months ago, according to Bloomberg, and focused on FTX’s relationship with US subsidiaries, as well as its relationship with sister company Alameda Research.
Armstrong made it clear earlier this week that Coinbase does not have FTX or Alameda exposure. FTX is now at risk of bankruptcy without investment after it canceled the redemption agreement with Binance.