US regulators don’t want to wait any longer with warnings. Banks have just been sent a joint document, signed by the largest regulatory institutions, which warns against cryptocurrencies.
After a series of high-profile bankruptcies and two massive crashes in the cryptocurrency market, US regulators sent banks a joint statement warning of the growing risks associated with the digital currency market.
Cryptocurrency Alert
A joint letter to US financial institutions was sent by the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of Foreign Exchange Control. The statement said that regulators are closely monitoring the activities of banks in the cryptocurrency market. A warning was also issued about the risks involved in financing such an uncertain market.
“The events of the past year have been marked by high uncertainty and vulnerability in the cryptocurrency market,” the statement said. The authorities also pointed out that “possession of crypto-currency assets stored on public servers and decentralized networks is contrary to accepted principles of safe banking practice.”
Luna and FTX, or the collapse of the crypto market
Even in 2021, cryptocurrencies seemed like a great future-oriented investment. However, 2022 has shown that these assets are even more risky than it might seem.
First, Luna and TerraUST showed their true colors. The currency and stablecoin suddenly collapsed, causing massive market turmoil and billions in losses. As soon as the situation stabilized a little, even more chaos erupted on the FTX exchange.
FTX below. Sam Bankman-Fried in custody
In early November, the crypto market experienced a shock. Documents from trading company Bankman-Fried’s Alameda Research have made it clear that the majority of Alameda’s net worth of $14.6 billion is made up of FTT tokens.
The FTT cryptocurrency was minted in any quantity by the FTX exchange, also owned by Bankman-Fried. This raised huge concerns about FTX’s solvency and ability to support the price of FTT tokens, which he quickly began to warn about, among other things. Binance CEO Changpeng Zhao. Investors started a massive FTT sell-off. In just a few days, the value of the token dropped from about $26 to $1. FTX stopped paying, and the awl came out of the bag - the company was insolvent.
Source: Wprost
