US Treasury Secretary Janet Yellen believes FTX collapse exposed weaknesses in crypto

FTX exchange collapse garnered the attention of regulators worldwide. Janet Yellen, US Treasury Secretary said that the FTX collapse exposed the “weaknesses” in the crypto ecosystem. Exchange token FTT started its recovery today 

Also read: With Binance CEO’s support for crypto Bitcoin price rallied 5%, what's next?

US Treasury Secretary critiques FTX exchange’s fall from grace 

Janet Yellen, US Treasury Secretary said that the crypto industry needs very careful regulation. Bloomberg reported that US regulators consider FTX exchange’s collapse as symptomatic of  weakness of the crypto sector. Yellen commented on the collapse of Samuel Bankman-Fried’s multibillion dollar exchange and the crypto market crash. 

Samuel Bankman-Fried’s FTX exchange filed for bankruptcy on November 11, 2022 after failure to secure a bailout from rival exchange Binance and Tron founder Justin Sun. The bankruptcy filing affects trading firm Alameda Research, FTX US exchange and 130 related companies.

Following the announcement of bankruptcy, Samuel Bankman-Fried stepped down as CEO. FTX exchange’s collapse started a dialogue among regulators. The US government is looking into regulating the crypto industry under an executive order from President Joe Biden. 

FTX Chief Executive said the exchange is working with law enforcement

John J. Ray III, new FTX Chief Executive said that the exchange is working with regulators and law-enforcement agencies to mitigate the problem. FTX exchange is making every effort to secure assets and cooperate with law makers. 

Kraken, a cryptocurrency exchange that froze accounts of FTX, Alameda Research and their executives said, 

We have actively monitored recent developments with the FTX estate, are in contact with law enforcement, and have frozen Kraken account access to certain funds we suspect to be associated with 'fraud, negligence or misconduct' related to FTX.

Binance CEO warned traders of cascading crypto crisis

Changpeng Zhao, CEO of Binance, the world’s largest crypto exchange, told seven million followers on Twitter that the platform is looking into the creation of an industry recovery fund. This fund would target projects that were otherwise strong but in a liquidity crisis. 

The announcement triggered a rally in crypto projects, Bitcoin and Ethereum prices yielded 5% gains within an hour of CZ’s tweet. 

FTT price recovered from its decline, yielded 40% gains in less than 24 hours after CZ’s announcement. FTT token recovered from $1.29 to $1.81. After clarity from CZ on the funds raised to support projects affected by FTX exchange collapse, sentiment among FTT holders turned bullish. 

Binance paused the deposits of FTX’s exchange tokens and halted its sale of 584 million FTT tokens after Samuel Bankman-Fried reached out to CZ. 

The exchange made this move to safeguard FTX’s native token FTT holders from massive volatility in the cryptocurrency’s price.