SEC Mistakes Responsible for the Collapse of FTX – Mark Cuban

Jimmy Aki
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Billionaire investor Mark Cuban has criticized the U.S. Securities and Exchange Commission (SEC) for adopting the wrong approach to regulating the crypto industry, which led to the fall of the FTX exchange.

An Urgent Need for a Holistic Approach to Digital Assets

On June 4, Shark Tank star and owner of the popular NBA team Dallas Mavericks, Mark Cuban, tagged the U.S. Securities and Exchange Commission (SEC) as arrogant and not infallible.

As detailed in his Twitter thread, the SEC and other crypto industry watchdogs in the United States have embodied wrong regulatory policies and complexities in the crypto sphere.

He further cited that if regulators had followed a clarified policy that required crypto platforms to separate customer and business funds, no one would have recorded losses caused by the FTX crash.

Bankruptcy has permeated the crypto industry, with notable firms closing down, such as Silicon Valley Bank, Silvergate, Voyager, Celsius, and BlockFi.

These closures have left investors bleeding due to losing assets and funds.

Mark believes the SEC has chosen litigation as the best way to instill justice rather than plan and implement a framework to end the rampant fraudulent schemes.

His stance about the SEC corroborates the criticism of crypto market observers about Gary Gensler, the chairman of the SEC, over adopting lawsuits as an enforcement-centric approach.

Recently, the SEC took action against major top-tier exchanges, including Coinbase and Binance.

On June 5, the SEC charged Binance and its CEO over trading unregistered securities and misrepresenting trading control of its U.S. subsidiary platform.

Coinbase had its share the next day as it was slammed with alleged operation as an unregistered securities exchange, broker, and clearing agency.

Japan Crypto Regulation: A Paradigm SEC Should Follow

Former Chief of SEC Office of Internet Enforcement (OIE) John Reed Stark replied to Mark Cuban’s tweet, which condemned the U.S. agency’s weak approach.

John emphasized that he aligns with Mark’s need for a better and clarity-driven framework. However, he disagreed that the SEC policies are to be blamed for the crash of FTX, Voyager, Celsius, and many more.

In response to the ex-OIE officer’s claim, Mark reiterated his stance that the SEC was to blame for the downtrend of the digital asset industry and mentioned Japan’s regulatory rules as a study example.

Japan is one of the few countries proactively creating a fair and transparent framework to regulate its crypto industry.

According to the Sanction Scanner report, Japan’s Payment Services Act (PSA) recognized Bitcoin and others as “virtual assets” and the right to be claimed as legitimate property.

Since the act was passed, the country has been at the forefront of all crypto-related activities, implementing several updates and amendments to existing frameworks to bolster transparency and security.

However, one of the most significant changes that have positioned Japan as one of the best countries for a transparent regulatory environment was made in May 2020.

The Financial Instrument and Exchange Act (FIEA) was passed into law as an amendment to the PSA, which replaced the term “Virtual Currency” with “Crypto Asset.”

Under the reviewed act, cryptocurrency exchanges in Japan are now mandated to register with the Financial Services Agency (FSA) before providing digital asset services to customers.

This change brought greater clarity and compliance from crypto exchanges and trading platforms and has provided greater protection to investors.

Mark believes the SEC and other U.S. crypto regulators should follow Japan’s footprint to protect crypto traders and investors from fraud.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.