FTX-Binance standoff highlights the need for clear rules — Sen. Lummis
Market manipulation, lending activity and safeguarding of customer funds and assets are some of the many issues Senator Lummis plans to address in the coming days.
The feud between the CEOs of crypto exchanges FTX and Binance — Sam Bankman-Fried (SBF) and Changpeng “CZ” Zhao — not only crashed cryptocurrency prices but also reminded regulators to step in and avoid similar fallouts in the future.
Ever since CZ publicly announced Binance’s intent to liquidate its FTX Token (FTT) holdings, investors anticipating a price dump began selling off their FTT holdings as a means to minimize their losses. What followed was a steep 86% drop in FTT’s market value, down from the $22 range to $3.00 in a matter of hours.
However, the eventful day concluded with CZ announcing Binance’s intent to acquire FTX, and SBF sufficed the move citing consumer protection. Reacting to this development, United States Senator Cynthia Lummis — known in the community for her strong belief in crypto — highlighted the need for clearer crypto regulations:
“The recent events that have transpired between FTX and Binance are the clearest example yet of why we need clear rules of the road for digital asset exchanges in the United States.”
She pointed out the importance of the Lummis-Gillibrand Responsible Financial Innovation Act, a bill sponsored by Senator Lummis that seeks to bring digital assets within the regulatory perimeter.
Given the evident influence of crypto entrepreneurs in swaying the cryptocurrency prices with just a few tweets, Lummis highlighted:
“Market manipulation, lending activity, and whether customer funds and assets were appropriately safeguarded are just a few of the many issues my colleagues and I need to consider in the coming days.”
While SBF chose to remain silent over the last 16 hours at the time of writing, CZ revealed topping Binance’s SAFE insurance fund with cryptocurrencies worth $1 billion to adjust to recent price fluctuations.
Related: Binance’s FTX acquisition seen as chess move by crypto community
As a result of the FTX-Binance fiasco, SBF’s personal wealth plummet 94% and ripping off his billionaire status overnight.
Before Binance’s takeover announcement, Bankman-Fried’s 53% stake in FTX was worth around $6.2 billion.