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The chairman of the US Securities Board hinted at “parallels” between cryptocurrency exchange Binance and bankrupt exchange FTX, namely their alleged use of subsidiaries to move funds.
Speaking to Bloomberg on June 6, U.S. Securities and Exchange Commission Chairman Gary Gensler pointed to FTX’s alleged fraud and manipulation of its subsidiary Alameda Research, including the alleged role played by founder Sam Bankman-Fried.
“There is a business model that ties and mixes features that we don’t see and won’t allow anywhere else in finance,” he said.
On June 5, the SEC filed a complaint against Binance, bringing a total of 13 charges. One of the allegations in the lawsuit alleges that the funds are from Binance and Binance. The US was merged into an account controlled by Merit Peak Limited associated with Changpeng Zhao.
Another claim claims that Binance. US engaged in fictitious trading through its “principal undisclosed trading firm, Sigma Chain,” which is owned by Zhao.
“Platform after platform, entrepreneurs […] trying to create wealth for themselves and their investors through subsidiaries — hedge funds — by trading against clients,” Gensler said.
So where is the FTX lawsuit?
A recent interview will likely add fuel to the ongoing Twitter debate – why didn’t the SEC sue FTX?
They didn’t sue FTX. https://t.co/FVgi5l6VcI
— CZ Binance (@cz_binance) June 6, 2023
In a June 6 tweet, Ripple CEO Brad Garlinghouse stated that the latest series of lawsuits is an attempt by the SEC to “divert” the agency’s attention from the “FTX collapse.”
Others have suggested that FTX’s heavy donations to political parties and Bankman-Fried’s frequent lobbying in Washington in the past may have also been a factor.
Why didn’t the SEC sue FTX?
Oh that’s right they allowed public servants to take *donations* and colluded with them to further oppress Americans https://t.co/EgKhB99e46
— Wendy O (@CryptoWendyO) June 6, 2023
Meanwhile, Markus Thielen, head of research and strategy at Matrixport and author of the Titans cryptocurrency, offered a different perspective. Speaking to Cointelegraph, he explained that prior to FTX, the cryptocurrency was not seen as a major threat to US financial stability.
The fall of three major banks this year proved otherwise, he said.
“Initially, it was not a priority to fix or stop the rails of the cryptocurrency,” Thielen said. “People realized that after FTX, it’s really billions of dollars.”
Thielen also believes that there is a concept of “embarrassment” for those who did not foresee problems in FTX, including lawmakers.
Related: Binance. US says user funds ‘remain safe’ amid SEC attempt to freeze assets
“You could make the argument that these people feel a little embarrassed and so they have to work doubly hard to really distance themselves from it.”
It should be noted that although the SEC did not file a lawsuit against the FTX exchange itself, the regulator brought charges against its founders and former leaders.
Among them are former FTX CEO Sam Bankman-Fried, former Alameda Research CEO Caroline Ellison, former FTX co-founder Gary Wang, and former FTX CTO Nishad Singh.
Cointelegraph contacted the SEC for comment but received no immediate response.