Gary Gensler, the U.S. Securities and Exchange Commission (SEC) chairman, believes the bankrupt cryptocurrency exchange FTX could be revived if the new management that would take over the business paid heed to appropriate laws.
According to a CNBC report, Gensler dropped the remarks during the 2023 D.C. Fintech Week held from November 6 to 8 in reference to reports that Tom Farley, former president of the New York Stock Exchange (NYSE) and founder of crypto exchange Bullish, is one of the three bidders contending to buy the remains of FTX.
“If Tom or anybody else wanted to be in this field, I would say, ‘Do it within the law.’ Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures — and also that you’re not commingling all these functions, trading against your customers. Or using their crypto assets for your own purposes,” Gensler stated.
The SEC chair further explained that the U.S. government would never let the NYSE operate a hedge fund and place trades against its members or customers in the market, just like FTX ran its sister trading firm Alameda Research simultaneously.
As a market maker for FTX, Alameda was given access to an unlimited line of credit with no collateral. The firm’s positions were not liquidated when its bets went negative. As a result, there was a multi-billion dollar hole in FTX’s balance sheet when the entity imploded in November 2022.
While FTX founder and former CEO Sam Bankman-Fried was tried and eventually found guilty, the FTX interim management, led by CEO John Ray, has tried to claw back funds from several sources and is making arrangements to reboot the exchange.
Although the management has remained tight-lipped on the suitors interested in buying the exchange, people familiar with the matter have revealed that Bullish, fintech startup Figure Technologies, and crypto venture capital firm Proof Group are the bidders selected from the 70 firms that applied for the auction.
The FTX interim management could select a winner by December, and the exchange may resume operations after it exits bankruptcy next year.
News of the companies bidding for FTX’s remains have triggered the exchange’s token FTT to soar roughly 70% within 24 hours. Per data from CoinMarketCap, FTT was trading at $2.16 at writing time, up from a Wednesday price of $1.23.