The Chairman of the United States Securities and Exchange Commission (SEC) has hinted at “parallels” between cryptocurrency exchange Binance and the crashing FTX exchange, namely, his alleged use of sister companies to move funds.
Speaking to Bloomberg on June 6, the chairman of the US SEC, Gary Gensler, noted FTX’s alleged fraud and manipulation in relation to its sister company Alameda Research, including its founder’s alleged role in it Sam Bankman-Fried.
“There is a business model that bundles and mixes functions that we don’t see, or would allow anywhere else, in finance,” said.
On June 5, the SEC filed a lawsuit against Binance bringing a total of 13 charges. One of the allegations in the lawsuit states that the funds from Binance and Binance.US were commingled in an account controlled by Merit Peak Limited, company associated with Changpeng Zhao.
Another indictment claims that Binance.US engaged in laundering operations through its “major undisclosed market making company Sigma Chain”, owned by Zhao.
“Platform after platform, entrepreneurs […] They are trying to create wealth for themselves and their investors through sister organizations – hedge funds – that operate against clients,” Gensler said.
And where is the lawsuit against FTX?
The recent interview is likely to add fuel to the ongoing debate on Twitter: Why hasn’t the SEC sued FTX?
They didn’t sue FTX. https://t.co/FVgi5l6VcI
— CZ Binance (@cz_binance) June 6, 2023
In a June 6 tweet, Ripple CEO, Brad Garlinghouse, said that the latest series of lawsuits is an attempt by the SEC to “distract” from the agency’s “FTX debacle.”
Others suggested that FTX’s large donations to political parties and Bankman-Fried’s frequent lobbying in Washington DC in the past could also be a factor.
Why didn’t the SEC sue FTX?
Oh that’s right they allowed public servants to take *donations* and colluded with them to further oppress Americans https://t.co/EgKhB99e46
—Wendy O (@CryptoWendyO) June 6, 2023
Meanwhile, Markus Thielen, head of research and strategy at Matrixport and author of Crypto Titans, offered a different perspective. Speaking to Cointelegraph, he explained that Before FTX, cryptocurrencies were not considered a big threat to the financial stability of the United States.
The failure of three big banks this year has shown otherwise, he said.
“Initially it was not a priority to fix or stop the crypto rails”, Thielen said. “People realized that after FTX, it’s actually billions of dollars.”
Thielen also believes that there is a notion of “shame” for those who didn’t foresee the problems at FTX, including legislators.
“You can make the argument that those people are a little bit embarrassed and so they have to work twice as hard to really distance themselves from it.”
It should be noted that while the SEC has not announced a lawsuit against the FTX exchange itself, the regulator has filed charges against its founders and former executives.
Among them are the former CEO of FTX, Sam Bankman-Fried, the former CEO of Alameda Research, Caroline Ellison, former FTX co-founder Gary Wang and former FTX Director of Engineering, Nishad Singh.
Cointelegraph reached out to the SEC for comment but did not receive an immediate response.
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