The news: Amid the FTX collapse, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are investigating the crypto exchange for mishandling customer funds, per Banking Dive.
Probe upon probe: Prior to its liquidity squeeze, the failing crypto exchange was already under investigation by regulatory agencies for allowing customers to trade derivatives products without being registered with federal regulators.
The Alameda Research website was taken down yesterday without any explanation and remains down.
What’s next for FTX? As the deal between Binance and FTX fell apart, the beleaguered crypto exchange reported that unless it secured $8 billion, it would potentially need to file for bankruptcy. Bankman-Fried is now searching for a lifeline, but FTX customers are likely to lose out.
Waves in the markets: Shockwaves from the bombshell news are hitting other exchanges and even stablecoins.
Our take: The latest crypto world drama suggests the crypto winter that has lasted much of 2022 shows no signs of a thaw. The continuous revelations of crypto exchanges’ wrongdoings and sketchy behavior has gutted consumer confidence. If regulators don’t act soon on the digital asset markets, they risk continuing to play catch up each time the messy truths behind crypto giants come out.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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