The pains of the cryptocurrency space are shared by a wide variety of companies. The US Securities Exchange Commission (SEC) warns public companies. The agency says they should tell investors if they have their share in the industry’s “recent grind”. Here are the details…
SEC asks crypto companies to make statements
“Recent bankruptcies and financial distress among crypto-asset market participants have caused widespread disruption in these markets,” the SEC’s Corporate Finance Division told US public companies on Thursday. He stated that companies must act under federal securities laws. Therefore, disclosure regarding the direct or indirect effects that these events and secondary events have or may have on their business pointed to obligations.
A sample letter to such companies asks if, for example, they face any risk to their businesses “due to excessive redemption, withdrawal, or suspension of redemption or withdrawal of crypto assets.” The Corporate Finance Division is the disclosure arm of the SEC and advises companies that issue securities on how to keep investors informed. In particular, it wants to talk about the risks that users may face.
As we reported on cryptokoin.com, the SEC was in general trouble with most of the crypto industry and insisted that most crypto asset platforms should be registered exchanges. However, many of these firms claim that they do not deal in securities or have anything to do with the institution.
Crypto space under scrutiny after FTX
SEC Chairman Gary Gensler said in a statement Wednesday that “there are rules” in the field. He also said that “law firms know how to advise their clients to comply.” He reiterated his views that the institution clarified what crypto companies should do.
Thursday’s document stated that the sample questions it would send were not “extensive.” He said companies should assess their own risks and concerns. The crypto industry has faced many high-profile failures and bankruptcies over the past few months. Crypto exchange FTX and multiple lenders have revealed that they owed millions of dollars in crypto to thousands of people.
Their ties to traditional financial institutions are also under scrutiny. On Wednesday, Senator Elizabeth Warren and Tina Smith wrote a letter to bank regulators. He asked them to examine these bonds and cited Moonstone Bank, where FTX has invested, as an example. The severity of FTX’s collapse is already being articulated, with many experts warning of the “domino effect”. Almost a month has passed since the collapse of FTX. Meanwhile, many cryptocurrencies have seen a negative impact from the situation. For example, Solana (SOL) and Ren (REN) cryptocurrencies have been closely associated with FTX. Because of this, it has seen some declines. Time will tell how the market will recover from this situation in the long run.
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