Even as cryptocurrency and other digital assets resident on blockchain have increasingly permeated the public consciousness, the question of regulatory authority has largely gone unanswered. Often, seismic events in the financial industry, like the collapse of FTX, lead to clarity. Here, unfortunately, instead of leading to any kind of consensus, the early signs indicate that the demise of FTX and its repercussions on other crypto companies have only reinforced the disagreements between the different stakeholders on how, or even whether, to regulate crypto. By now, most people are familiar with the saga of FTX and Sam Bankman-Fried, the founder, majority owner, and, until recently, wunderkind CEO of the now-defunct crypto exchange. Before his abrupt fall from grace, “SBF,” as Bankman-Fried has become known, had the ear of public officials, regulators and celebrities, and a public image as the kinder, gentler, face of crypto. After a November 2022 article in Coindesk reported that the bulk of the holdings of Alameda Research, SBF’s trading firm, were in FTX’s token, a run on the bank was triggered. That led to SBF’s resignation and forced FTX and related entities into bankruptcy, with FTX’s customers and investors out billions of dollars. SBF was subsequently indicted in the Southern District of New York (S.D.N.Y.) for a variety of crimes, including wire fraud, conspiracy and money-laundering, stemming from his alleged use of assets belonging to FTX’s customers to plug a shortfall in Alameda and his alleged lies to investors.
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