United States: Following the spectacular collapse of cryptocurrency exchange FTX last week, regulators launched an investigation, and rival exchanges tried to reassure uneasy investors of its stability, which weighed on the cryptocurrency on Monday.

The collapse of the cryptocurrency industry's beloved FTX, with a valuation of $32 billion as of January, has prompted inquiries from the US Department of Justice, the Securities and Exchange Commission, and the Commodity Commission, according to a source with knowledge of the investigation. Futures Trading Commission.

According to a second source with knowledge of the investigation, the SEC is also investigating FTX executives, their information about the handling of client funds, and possible violations of securities laws.

Also Read: Saudi Arabia: Country will host MENA climate week in 2023

While the cryptocurrency industry has argued that digital assets are fundamentally different from traditional finance, Federal Reserve Vice President Lyle Brainard said on Monday that the sector has shown itself to be vulnerable to similar risks and should be governed by similar laws. ,

He told Bloomberg that when he told Bloomberg that cryptocurrency finance needed to be regulated, he reiterated a long-held belief that its risks are similar to those of traditional finance.

Separately, the Fed's top regulatory official Michael Barr indicated on Monday that tighter regulation of cryptocurrencies is on the way.

Barr said in written testimony that was made available ahead of his appearance before the Senate Banking Committee on Tuesday that it includes "security measures" to ensure that cryptocurrency companies are subject to the same laws as other financial firms.

The Democratic chairman of the committee, US Senator Sherrod Brown, also spoke. He claimed, “My focus has always been on the fraud, scams, volatility and outright theft of the crypto industry.

Several other recent examples of FTX failure and instability demonstrate the need for a thorough regulatory strategy that protects consumers.

In one of the most publicized crypto meltdowns, FTX filed for bankruptcy protection on Friday after angry traders withdrew US$6 billion from the platform in just 72 hours and rival exchange Binance abandoned a rescue plan.

In one of the most publicized crypto meltdowns, FTX filed for bankruptcy protection on Friday after angry traders withdrew US$6 billion from the platform in just 72 hours and rival exchange Binance abandoned a rescue plan. In an interview with The New York Times that was published on Monday, former FTX CEO Sam Bankman-Fried claimed that his company has grown too quickly.

Also Read:  Airtel  launched a new Rs.199 prepaid recharge plan with 3GB of data and a 30-day validity period

Bitcoin, which hit a record high of US$69,000 a year ago, fell below US$16,000 early Monday (2256 GMT), up 0.56 percent at 5:56 EST, before trading at US$16,401.

cascade effect

Once a savior for faltering cryptocurrency companies, the sudden demise of FTX sent shock waves through the region, which is preparing for further downside.

LedgerX LLC, a subsidiary of FTX, withdrew its application to the US Commodity Futures Trading Commission in December of last year to allow it to offer products that are not fully collateralized on Monday.

One cryptocurrency lender, BlockFi, claimed to pose a major risk to FTX, after agreeing to offer it a revolving credit facility of US$400 million with the option to buy it for up to US$240 million.

In an effort to calm investor nerves amid unverified rumours, other cryptocurrency exchanges are publishing information about their reserves and making additional disclosures.

A US$700 million deal to rename the Los Angeles Staples Center to Crypto.com Arena made headlines in 2021, but Chris Marszalek, chief executive of Singapore-based cryptocurrency exchange Crypto.com, claimed the company was in trouble.

An audited proof of Crypto.com's reserves will be published in the coming weeks, according to Marszelek, who said the exchange will always match each coin users placed on its platform in an "ask-me-anything" YouTube live-stream. reserves for.

The action was taken after investors questioned the transfer of $400 million worth of Ether tokens to the Gate.io exchange over the weekend on Twitter.

Although the Wall Street Journal reported that withdrawals on Crypto.com increased over the weekend, Marszalek tweeted on Sunday that Ether had been found and returned to the exchange.
A Crypto.com spokesperson did not respond to a request for comment if the platform's outflows continued on Monday.

Although smaller than FTX and the market leader Binance, Crypto.com is one of the top 10 such exchanges worldwide by turnover.

On Sunday, a different cryptocurrency exchange, Kraken, announced on Twitter that it had frozen the accounts of FTX, its affiliated crypto trading company Alameda Research, and their executives.

Also Read:  Samsung Galaxy S23 might have less powerful vibration motor and cost less than Galaxy S22

According to a Kraken spokesperson, "We have closely followed recent developments involving the FTX estate, are in touch with law enforcement, and have frozen Kraken account access to certain funds we suspect to be connected to 'fraud, negligence, or misconduct' related to FTX."

The CEO of Binance, the biggest cryptocurrency exchange in the world, Changpeng Zhao, announced that he would look to establish a fund to help projects that were "otherwise strong but in a liquidity crisis."

Last week, Binance agreed to a non-binding letter of intent to purchase FTX's non-US assets, but later backed out of the agreement, causing FTX to file for bankruptcy. Since then, Zhao has issued a "cascading" crypto crisis warning.