FTX collapse: US asks companies to disclose exposure to beleaguered crypto firms

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IANS | 12 Dec, 2022
In the wake of the collapse of crypto exchange FTX, the US Securities and Exchange Commission (SEC) has directed publicly-traded companies to tell investors about their involvement with struggling cryptocurrency firms.

The SEC, in a letter to the companies, said that recent bankruptcies and financial distress among crypto asset market participants have caused widespread disruption in those markets.

"Companies may have disclosure obligations under the federal securities laws related to the direct or indirect impact that these events and collateral events have had or may have on their business," the commission said.

FTX filed for bankruptcy last month after its possible merger with leading crypto exchange Binance did not materialise.

The US House Financial Services Committee is probing the controversial collapse of the crypto exchange that wiped out billions of investors' money.

According to the FTC, the Division of Corporation Finance believes that companies should evaluate their disclosures with a view towards providing investors with specific, tailored disclosure about the market events and conditions, the company's situation in relation to those events and conditions, and the potential impact on investors.

"Companies with ongoing reporting obligations should consider whether their existing disclosures should be updated," it advised.

Sam Bankman-Fried (SBF), former CEO of now bankrupt crypto exchange FTX, is expected to testify before a US Congress committee hearing on December 13.

According to reports, SBF "secretly transferred $10 billion in FTX client funds to his trading house Alameda Research".