After it was discovered that FTX was dealing with financial issues and the crypto exchange paused withdrawals, U.S. regulators started to take notice. On Nov. 10, 2022, California’s Department of Financial Protection and Innovation (DFPI) published a consumer alert and said the state regulator was “investigating the apparent failure of crypto asset platform FTX.”
California’s Department of Financial Protection Investigates FTX, Publishes Consumer Warning
Following the report that shows the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are reportedly investigating FTX, California’s DFPI has published a consumer warning about FTX.
“[DFPI] is investigating the apparent failure of crypto asset platform FTX,” the regulator’s warning says. “We encourage consumers to be aware of the risks of investing in volatile crypto assets. Consumers and investors must be aware that crypto assets are high-risk investments and should not expect to be reimbursed for any losses.”
The news follows FTX’s rise to the top after close to three years, only to plummet to the bottom in a matter of three days. Furthermore, U.S. Senator Elizabeth Warren told the public that the incident has highlighted that the crypto industry needs “more aggressive enforcement.” Additionally, the Bahamas Securities Commission revealed it has frozen the assets of FTX Digital Markets.
California’s DFPI says that the regulator is responsible for the state’s lending and banking laws and crypto asset providers are not the same as California-regulated financial institutions, the DFPI agency highlighted. “Crypto asset providers are not governed by the same rules and protections as banks and credit unions, which are required to have deposit insurance,” the consumer warning notes.
What do you think about California’s DFPI publishing a consumer warning concerning the crypto exchange FTX? Let us know what you think about this subject in the comments section below.