Former US Treasury Secretary Lawrence Summers talked about the collapse of cryptocurrency exchange FTX. Meanwhile, Congressman Brad Sherman claims FTX is ‘bypassing the law’ with money. Heavy words from Andrea Enria, President of the European Central Bank, to cryptocurrency developers. US Treasury Secretary Janet Yellen said that the FTX collapse exposed weaknesses in crypto. Fed’s Lael Brainard noted that crypto finance needs strong regulation. Continue reading us for details…
Larry Summers compares cryptocurrency exchange FTX to Enron
Former US Treasury Secretary Lawrence Summers compared cryptocurrency exchange FTX to Enron. He stated that the situation is a classic scam rather than the complexity of cryptocurrency regulation. He also noted that the regulatory community should draw two lessons from FTX’s collapse. In this context, Summers made the following statement:
A lot of people likened it to Lehman. I would compare it to Enron. The smartest guys in the room. It’s not just a financial mistake, it’s also… a breeze of fraud. Stadium names are very early in a company’s history. A massive explosion of wealth, from which no one knows exactly where it came from.
Congressman Brad Sherman: FTX circumvented the law with money
Anti-crypto Congressman Brad Sherman made a statement about the FTX collapse. Sherman said his anti-crypto stance was correct from the start. He called on the SEC to take decisive action in this direction. Sherman also suggested that FTX supports Democrats to influence crypto regulations. He noted that he was justified in calling on the SEC to take action against unregistered exchanges in early 2022.
Additionally, Sherman added that he plans to review options for federal crypto legislation with his colleagues in the coming weeks. Sherman claimed that millionaire crypto personalities “filled Washington with millions of dollars.”
European Central Bank President: Cryptocurrency providers are animals
Andrea Enria, head of financial supervision at the European Central Bank (ECB), has described Europe-based crypto regulators as a threat to consumer protection. Accordingly, he made heavy words against crypto-asset providers. According to the ECB, crypto asset providers “never think about financial risks. They also do not respect national borders.” Andrea Enria, chairman of the ECB’s supervisory board, voiced:
I’m worried about my colleagues who will have to do this audit in the future. Because these are animals with whom it is difficult to relate.
Janet Yellen: FTX collapse exposes weaknesses in crypto
The collapse of the FTX exchange caught the attention of regulators around the world. US Treasury Secretary Janet Yellen commented on the collapse of Samuel Bankman-Fried’s multi-billion-dollar stock market and the collapse of the cryptocurrency market. Yellen said the FTX crash exposed “weaknesses” in the crypto ecosystem. Additionally, Yellen noted that the crypto industry needs very careful regulation. Bloomberg reported that US regulators saw the collapse of the FTX exchange as a symptom of the weakness of the crypto sector.
Lael Brainard: Crypto market needs strong regulation
Federal Reserve Deputy Chairman Lael Brainard said that the recent turmoil in the cryptocurrency market shows that traditional finance needs to be regulated as tightly as it is. “It’s really worrying to see individual investors really hurt by these losses,” Brainard said. He also reiterated his long-held view that crypto finance needs strong regulation. In this context, Brainard made the following statement:
Despite a lot of hype… you’ve heard a lot about how decentralized these markets are. It turns out that they are very concentrated, very interconnected. You just see a domino effect. Failures on one platform are spreading elsewhere. I think it reinforces the need to make sure that crypto finance is not different from traditional finance in terms of the risks it poses so it should be under regulatory limits.
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