The new head of global securities regulator IOSCO said the collapse of the FTX exchange shows why the agency will focus on companies like it next year.
Speaking to Reuters last week, Jean-Paul Servais said the fall of the company, which has left its creditors facing billions in losses, will light a fire in the regulatory community, which had historically resisted writing new rules for cryptoassets.
“The sense of urgency was not the same even two or three years ago,” he said. “There are some dissenting opinions about whether crypto is a real issue at the international level because some people think that it’s still not a material issue and risk.”
Servais added that things “are changing, and due to the interconnectivity between different types of businesses, I think it’s now important that we are able to start a discussion, and that’s where we are going.”
FTX Founder Sam Bankman-Fried has said his own lack of oversight helped bring about the downfall of the company.
In an apology to his former employees published last week, SBF, as he’s often called, said outsized borrowing by sister firm Alameda Research helped trigger to the FTX crash earlier month, although his own “oversight failure” is to blame.
“You were my family,” he wrote. “I’ve lost that, and our old home is an empty warehouse of monitors. When I turn around, there’s no one left to talk to.”
The letter followed the first day of FTX’s federal bankruptcy hearing, in which James Bromley, representing the company’s new management, described the firm as being “run as a personal fiefdom of Sam Bankman-Fried.”
And John J. Ray, who was named CEO of FTX following the bankruptcy filing, has called the situation at the company the worst he’s seen in 40 years of restructuring work.
Writing about the collapse earlier this month, PYMNTS’ Karen Webster asked about the lack of “adults in the room” at FTX, where “SBF was allowed to operate the business without an independent board — or, it appears, even a prominent CFO.”
“I suspect that no one felt they could push back or ask the tough questions for fear of being denied access to the cool kid who was going to change the world,” she wrote. “Or risk being ridiculed for not being ‘smart enough’ to understand the vision that only cool kids at the cool kid table could fully comprehend.”