US Treasury’s Janet Yellen Compares FTX Collapse Like A Lehman Moment
Following the collapse of the crypto exchange FTX, US Treasury Secretary Janet Yellen spoke on the need for sufficient crypto regulation at an event held by the New York Times Dealbook on Wednesday.
Yellen compared the FTX collapse to the failure of Lehman Brothers. In 2008, the investment bank filed for Chapter 11 bankruptcy, resulting in a massive stock market slump and a $700 billion bailout from the US government. Yellen stated:
“It’s a Lehman moment within crypto, and crypto is big enough that you’ve had substantial harm of investors, and particularly people who aren’t very well-informed about the risks that they’re undertaking, and that’s a very bad thing.”
Yellen then addressed the demise of FTX, which declared bankruptcy on November 11, and its former CEO, Sam Bankman-Fried. She stated:
“This is an industry that really needs to have adequate regulation and it doesn’t. We have consistently urged that regulatory gaps be closed and I think this experience with his firm, or set of firms, just couldn’t provide a better illustration.”
Earlier this month, Yellen stated that the bankruptcy of FTX has reaffirmed her belief that the crypto industry needed extremely rigorous supervision, and this market still has many weaknesses.
Before that, Yellen once again expressed interest in the crypto market and argued that it needs more scrutiny, she mentioned a major cryptocurrency exchange that recently collapsed, none other than FTX. She said that the recent failure of a major cryptocurrency exchange and the unfortunate impact that has for holders and investors of crypto assets demonstrates the need for more effective oversight of cryptocurrency markets.
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