‘Beware’ of Crypto investing or risk bankruptcy court, SEC Chair warns

Investing

The head of the Securities and Exchange Commission cautioned Americans about the risks of investing in the lightly regulated cryptocurrency industry Thursday, a dire warning as one of the largest crypto exchanges FTX goes up in flames.

Photo illustration by Jakub Porzycki/NurPhoto via Getty Images
Key Background

FTX’s fall from grace happened in a matter of days, with the exchange experiencing a run of withdrawals early this week after Binance CEO Changpeng Zhao expressed concerns about insolvency concerns at his rival. Binance entered an agreement to acquire FTX on Tuesday before bailing a day later, explaining the liquidity “issues are beyond our control or ability to help.” The one-time industry titan FTX dragged down the rest of the crypto market with it, sending the largest coins, bitcoin and ether, down 18% and 21% this week, respectively, while Coinbase shares tanked 23%.

When reached via text by Forbes about him dropping from our list of billionaires, Bankman-Fried offered his first public comment since the Binance deal went haywire: “Hey, not totally clear but certainly can’t confidently dispute, will update later if new info comes out…”

Chief Critic

“It’s unbelievably frustrating that we basically have a situation that looks like Theranos,” Galaxy Digital CEO Michael Novogratz told CNBC Thursday, referring to the infamous multi-billion dollar biotechnology firm founded by Elizabeth Holmes that was later revealed to be fraudulent. Novogratz’s firm held $77 million in assets at FTX, money the investor said he’s unsure he’ll ever see again.

This article was first published on forbes.com

Binance Bails On FTX Acquisition — Here’s What Led To The FTX Crypto Crash (Forbes)