The FTX event had the U.S. Senate committee hold a hearing on Wednesday, 13th December 2022, with five witnesses present. Senator Cynthia Lummis, one of the Senate committee members, stated categorically that digital assets should be separated from corrupt organizations. She also said the Financial Innovation Act will be reintroduced next year, 2023.
The act, according to MS. Lummis has been on the committee’s desk as she and one other member have been talking to the committee about it. She pointed at the hearing that it is time to move to a regulated digital assets industry. She mentioned that the issue on trial is a case study and why a responsible Financial Innovation Act is needed. “We will be reintroducing the bill next year. We are absolutely willing to take your comments, suggestions, and ideas, and it’s time to move to a regulated digital assets industry,” she said.
The Senate hearing was called for two reasons, according to the house. “The first is to examine the spectacular collapse of the crypto company FTX and second the sister company Alameda Research, both linked to Sam Bankman-Fried.” “This company was valued at more than 32 billion dollars earlier this year and today it is worth less than nothing, the committee read.”
MS. Lummis, in her statement, emphasized that digital assets are not on trial, rather, fraud and organization are on trial. “Let’s not conflict topics here; mismanagement, failure of people, inadequate controls is what is on trial. Let’s separate digital assets from corrupt organizations,” she said.
She explained that FTX is an old-fashioned fraud, and all we’ve heard is that FTX lent its executives hundreds and millions of dollars and co-mingled customers’ funds for personal use. Customers who tried to wire money to FTX were instead given Alameda’s routing number. That is a fraud, she affirmed and added that whether it is conducted in U.S. dollars or Euros or digital assets, that is fraud.
The Senator firmly pointed out a need to regulate this business and lay digital assets on top of the existing financial regulation. The FTX failure is not a failure of technology, she insinuated. However, the people in the digital assets industry need to get serious with risk management and compliance, she said.
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