Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero questioned the diligence of FTX Venture Capitals, given that they provided no oversight even with the staggering levels of poor and unskilled management of the company. stock market now bankrupt.
Romero’s tough questions
speaking to Bloombergthe commissioner raised serious questions about investor morale by pouring hundreds of millions into a company with allegedly incompetent leadership like FTX.
Romero explained that he needed to understand how institutional players, who are also experienced investors, would not investigate the company even after paying off millions of dollars in less than 12 months.
The CFTC’s investigation comes after FTX’s new CEO, John Ray, revealed in his bankruptcy filings that the company did not keep any financial records. FTX’s bankruptcy filings also showed that leadership had no control over the company’s finances and hired auditors “no one has ever heard of.”
Following this revelation, he questioned whether seasoned venture capitalists turned a blind eye to the mismanaged exchange or whether the company’s fictitious promises clouded their vision. Still, Romero claimed that the false promises made by then-CEO of FTX, Sam Bankman-Fried, violated the trust of his clients.
Need for more regulation
The commissioner added that LedgerX, a unit of FTX that had been registered and regulated by the CFTC, survived the fall from bankruptcy. He exemplifies the need for more regulation within the crypto space.
She emphasized the need for crypto regulations to restore the trust of the American people. The CFTC would ensure that crypto markets are cleansed of such irregularities by combining regulatory and enforcement actions. She revealed that the regulator is examining the crypto market and filing cases of that nature.
With that, he encouraged Congress to take up the legislation. Previously, the agency warned against crypto exchanges that self-certify and list products without oversight. With the laws in place, it would ensure that regulators like the Securities and Exchange Commission (SEC) can prevent mismanagement within such rogue platforms.
