Mark Cuban Gives Presidency Serious Consideration

Billionaire Mark Cuban Assigns Blame Over Crypto Crisis

Mark Cuban is not happy and is making it known.

The successful entrepreneur, like most business circles, seems to have been shocked by the implosion, in less than a week, of FTX, one of the major players in the crypto sphere.

The cryptocurrency exchange filed for Chapter 11 bankruptcy on Nov. 11, after three tumultuous days, prompting a $32 billion company to urgently call for help from its rivals in February.

But FTX’s financial situation was too dire for a potential rescuer to try to save it. Binance, the largest crypto exchange and major competitor of FTX, tried but eventually gave up.

“Due to corporate due diligence, as well as the latest news reports about mishandled client funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com,” Binance said. November 9.

“At the beginning, our hope was to be able to support FTX’s customers in providing liquidity, but the issues are beyond our control or ability to help.”

FTX’s controversial practices

As a crypto exchange, FTX executed orders for their clients, took their cash and bought cryptocurrencies on their behalf. FTX acted as a custodian and held the clients’ cryptocurrencies.

FTX then used its clients’ crypto assets, through its sister company’s Alameda Research trading arm, to generate cash through loans or market making. The cash loaned to FTX was used to sponsor other crypto institutions in the summer of 2022.

At the same time, FTX used the cryptocurrency it issued, FTT, as collateral on its balance sheet. This represented a significant exposure due to the concentration risk and the volatility of FTT.

As soon as this exposure came to light, clients, fearing an FTX crash, rushed to liquidate their crypto positions and get their money back. On November 6, customers withdrew a record $5 billion. It was a run on the stock market. This led to the insolvency of FTX, as it did not have the crypto-assets, which have now been lent or sold, to meet its clients’ sell orders.

The panic sent cryptocurrency prices tumbling. Shares of crypto companies like Coinbase (COIN) – Get free reportMicro strategy (MSTR) – Get free report and Robinhood (HOOD) – Get free report are sold by investors, who fear a contagion effect. The question now is which companies will be affected.

The search for responsibility also began, to try to understand how a company of this size could implode, without the regulators realizing the risk, especially since its former Chief Executive Officer, Sam Bankman-Fried, in the ears of this same regulators whispered. politicians to define what regulation will be sufficient for the sector.

Where was the SEC?

Mark Cuban, who has invested in several cryptocurrency-related firms and projects, believes regulators have not done their job. He particularly targets the US Securities and Exchange Commission (SEC).

For the billionaire, contrary to what people say, the crypto industry is regulated. It just so happens that the SEC has failed in its role. This is what he just said on Twitter.

“Everybody says crypto is unregulated,” the Shark Tank star said on Twitter on Nov. 12. “Not true. The SEC says they regulate crypto. Ask Kim Kardashian and the tokens they’ve sued or settled with.”

He continued: “The question is, given the visibility of the central exchanges, why hasn’t the SEC already knocked on their doors?”

FTX was a centralized exchange.

The owner of the Dallas Mavericks refers to sanctions and fines imposed by the SEC on cryptocurrencies or projects. For him, if the SEC sees fit to punish Kim Kardashian for promoting scam coins, it clearly means that the federal agency is regulating the sector. Part of the responsibility for the FTX debacle therefore lies with them.

Last month, the SEC charged Kardashian for promoting a cryptocurrency on social networks that appeared to be a scam. The reality TV star agreed to pay $1.26 million in fines to settle the investigation.

The crypto industry is particularly suspicious of the regulatory agency, accusing it of deliberately refusing to set clear rules. Federal agency prefers regulation through enforcement, crypto players criticize.

The SEC, contacted by TheStreet, did not immediately respond.

Investigations

“I think that investors need better protection in this space. But I would say it’s a significantly underserved field,” SEC Chairman Gary Gensler told CNBC on Nov. 10. “But it has regulation and those regulations are often very clear and we have multiple paths.”

“And one path is to work with those crypto exchanges, crypto lending platforms, and to get them properly registered and why it matters is that the public is protected. But we have another path which is enforcement. We between my predecessor and the teams now at the SEC have at least 100 actions in this case and we’ve been very clear in these various enforcement actions and we’ve won big.”

The SEC, the Commodity Futures Trading Commission (CFTC) and the Department of Justice (DoJ) have opened investigations into FTX. Regulators are under pressure from lawmakers.

Senator Elizabeth Warren called for “more aggressive enforcement” of consumer protection laws.

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