SEC Chair Gary Gensler testified before the House Financial Services Committee as Representative Bill Posey questioned him on the collapse of the crypto exchange FTX in November 2022.
Gensler evasive on FTX
Congressman Posey took over a conversation about how crypto companies mix different business functions and asked the SEC Chair if he was worried about how FTX worked before it failed.
In response, the head of the U.S. SEC said that there were worries about functions like the exchange, broker-dealer, and hedge funds combined.
In response, Congressman Posey asked, “Given these concerns, have you asked your staff to look into them?”
Remember that when the FTX collapsed in November 2022, it stated that the SEC and Sam Bankman-Fried (SBF) were working on a deal to settle the situation. Some people said that SBF’s mother probably contacted Gensler.
Gensler said at the hearing before Congress that the SEC had taken some steps against SBF for breaking the Securities Act.
When questioned how he first noticed issues with FTX, he responded that he saw steps being taken against FTX in December 2022.
Given the magnitude of the market losses, the SEC was accused of moving too slowly to take any action against FTX.
The Committee’s chairman, Patrick McHenry, also asked Gensler whether ETH was a security or a commodity. Growing uncertainty and harsh enforcement of crypto regulations were the focus of this inquiry.
In response to a question on whether he considered ETH a security or a commodity, Gensler deflected by saying that the “facts and circumstances” of specific crypto tokens and the Howey test should be considered.
FTX’s impact on investors
Bill Posey questioned the SEC Chair on the timing of the public and investor alerts following the SEC’s meeting with FTX. Gensler emphasized that, for the sake of the ongoing SEC inquiry, specifics were under wraps.
For the sake of the investigation’s credibility and the privacy of those involved, we treat any information gathered as strictly confidential.