Cuban and ex-SEC official debate FTX collapse and crypto regulations.
American billionaire Mark Cuban and former US Securities Exchange Commission official John Reed Stark are debating the reasons behind the collapse of FTX and how US customers could have been better protected.
In a tweet, Mark Cuban, star of Shark Tank, suggested that if the US SEC had implemented regulations similar to Japan, US customers would not have lost money in the FTX collapse.
John Reed Stark, former US SEC official, replied that blaming the SEC in such cases is a “bit of a stretch.”
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Stark had previously tweeted that the crypto-ecosystem, which operates without regulatory oversight, consumer protections, and auditing, is not only unsafe and dangerous but also susceptible to fraud and deception.
Stark also dismissed the creation of CBDCs as useless and risky for global finance.
Mark Cuban praises Japan for correctly regulating crypto
The American billionaire responded to John Reed’s tweet, stating that he should read about how Japan regulates cryptocurrencies.
Cuban pointed out that when FTX crashed, no one in FTX Japan lost money.
He further suggested that if the SEC had followed Japan’s example by implementing clear regulations that required the separation of customer and business funds, as well as clear wallet requirements, no US customer would have lost money in the FTX debacle.
Stark, who is not a fan of cryptocurrencies, replied to Cuban, stating that blaming the SEC for FTX, BlockFi, Celsius, Terra, Voyager, and other crypto-frauds is “a bit of a stretch.”
While acknowledging that he also has many negative things to say about the SEC, Stark claimed that the financial regulator saved US customers “millions, perhaps even billions” in crypto losses.
Referring to the SEC’s limited authority, Stark said that the financial regulator’s role is to oversee an anarchical financial industry with no insurance, regulatory oversight, insider trading or market manipulation prohibitions. He added:
“That’s a tough row to hoe for a civil enforcement agency with no criminal investigatory or prosecutorial powers.”
“Coinbase, Binance opted to ignore the SEC”
Mark Cuban suggested that requiring companies to register is the worst way to prevent fraud in any industry. He added that implementing clear investor protection regulations, like Japan, is the best way to prevent crypto frauds.
John Reed replied that it doesn’t matter what the mandated compliance structure was, FTX would not have complied regardless.
The former official also claimed that companies like Beaxy, Bittrex, Coinbase, Binance, Voyager, and others also chose to ignore the SEC and profit as long as possible without registering.
The ongoing enforcement actions against these companies are not surprising, as they had been warned repeatedly by the financial regulator and still chose to ignore it, he added.
Binance and Coinbase are both facing several charges, including operating as securities exchanges without registering with the SEC.
