Beleaguered FTX Goes Under California Regulator’s Investigation

Globally, regulators seem to be mulling the idea of launching several probes into the FTX ongoing crisis which has left the exchange on the verge of collapse.

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Apart from the investigation from the local regulator, the Securities Commission of the Bahamas, California’s Department of Financial Protection and Innovation (DFPI) has announced its plan to investigate the failure of FTX.

This makes California the first state to officially announce an investigation of the distraught cryptocurrency exchange after its failed acquisition deal with the world’s largest cryptocurrency exchange Binance. Some other states like Texas were already probing Sam Bankman-Fried FTX even before its insolvency and liquidity crunch situation became a crisis.

As per the published statement, “The DFPI is the agency responsible for administering the state’s lending and banking laws, the recent California Consumer Financial Protection Law, and the state’s securities laws, which govern broker-dealers, investment advisers, and commodities.”

Even though the issue has been handled as an ‘oversight responsibility’, the California DFPI is taking it seriously. With this, it is issuing a warning to all digital asset service providers and other financial institutions in the region to comply with regulations and not violate any financial laws. 

“We expect any person offering securities, lender, or other financial services provider that operates in California to comply with our financial laws,” DFPI wrote

U.S Regulators Probe FTX And SBF

The California regulator released a hotline for affected victims of the FTX crisis to call and file a complaint.

Amidst the crisis, SBF posted a 22-thread tweet claiming that its United States business FTX U.S is not affected by the crash and is still 100% solvent. The U.S regulators, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission(CFTC) are also probing the beleaguered crypto exchange.

Even with their different stance on categorizing digital assets, both entities are focused on enhancing the stability of the financial system. Presently, the pivot point of their investigation is the connection between SBF’s other crypto businesses and FTX. Gary Gensler, Chairman of the U.S SEC sees the FTX situation as part of a bigger trend that started at the beginning of the year.

“What we’ve seen in the last two days, if I can sort of step back from it a bit, it’s part of a pattern of what we have seen over the past six or eight months,” Gensler noted.

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