FTX is in freefall. Where was the oversight?

The downfall of the cryptocurrency exchange FTX has deepened concerns about the lack of safeguards in crypto for big investors and everyday consumers alike —

The downfall of the cryptocurrency exchange FTX has deepened concerns about the lack of safeguards in crypto for big investors and everyday consumers alike — and escalated questions about what role the government should have in an industry known for its defiantly anti-establishment attitude.

The Bahamas-based company on Friday started the process of filing for Chapter 11 bankruptcy protections. The 30-year-old chief executive Sam Bankman-Fried, who rapidly rose to fame as a billionaire entrepreneur and philanthropist, resigned. Reuters and CNBC reported that two unnamed sources said $1 billion in customer assets may be missing; NBC News has not confirmed that report.

It’s a collapse that highlights how U.S. regulators have been slow to take action in a space where there are few concrete answers about how much power they have. Earlier this year, Securities and Exchange Commissioner Hester Peirce told CNBC at a blockchain conference that the U.S. had “dropped the regulatory ball.”

Peirce recently said FTX could be a “catalyst” for the government to clarify crypto regulation and that the SEC would be an effective regulator “if we got our act together,” according to CoinDesk.

The regulation gap for FTX is twofold: Crypto is an almost entirely unregulated industry, and any oversight U.S. regulators would have had was nullified by FTX being headquartered in the Bahamas. 

https://www.nbcnews.com/tech/crypto/ftx-freefall-was-oversight-rcna57098

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