California Regulator Reveals Investigation into FTX Failure, Says “Crypto-Investments Are Dangerous Investments”
California Regulator Reveals Investigation into FTX Failure, Says “Crypto-Investments Are Dangerous Investments”. When it was discovered that FTX was involved in financial transactions with a suspended crypto exchange, US regulators began to take notice. In Nov. On December 10, 2022, the California Department of Financial Protection and Innovation (DFPI) issued a consumer notice and said that the state regulator is “investigating the potential failure of the FTX crypto asset”.
The California Department of Securities is investigating FTX, issuing a consumer warning
Following the news that the United States Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) will investigate FTX, the California DFPI issued a warning to consumers about FTX.
“[DFPI] is investigating the apparent failure of the FTX crypto-asset platform,” the regulator’s warning reads. “We encourage consumers to be aware of the risks of investing in volatile crypto assets. Consumers and investors should be aware that crypto assets are a serious investment. at risk and does not expect to be compensated for any loss.
The news follows FTX climbing to an all-time high after nearly three years, only to hit a three-day low. In addition, US Senator Elizabeth Warren told the audience that the incident highlighted that the crypto industry needs “stronger enforcement.” In addition, the Bahamas Securities Commission announced that it has frozen the assets of FTX Digital Markets.
California’s DFPI states that the regulator oversees the state’s lending and banking regulations and that crypto asset providers are not the same financial institutions regulated by California, the DFPI office said. “Crypto-asset providers are not governed by the same rules and regulations as banks and credit unions, which require them to have deposit insurance,” notes the consumer warning.