- Gary Gensler sees in the structure of Binance signs of the same scheme as in the case of FTX
- He believes that the cryptocurrency could undermine investor confidence in the capital market
- And warned users against investing in those projects where the management has its own share of crypto assets
Chairman of the SEC (Securities and Exchange Commission) Gary Gensler gave an interview to Bloomberg, in which he commented on the claim against Binance. During his interview with the host he repeatedly compared it to FTX, pointing out parallels between the two companies.
In the interview, Gensler stressed that the cryptocurrency industry risks undermining investor confidence in the capital markets. He said large service providers in the sector were “mishandling” customer funds and deliberately misleading them.
He also noted “similarities” between FTX and Binance in the way the two companies were using subsidiary units to redistribute funds.. Alameda Research, for example, was an important element of the Bankman-Frieda fraud scheme.
“There is a business model that links and mixes functions that we do not see, and would not allow anywhere else in finance,” Gensler emphasized.
He also warned investors against investing on the advice of advisers who hold crypto assets in their own projects:
“Platform after platform, entrepreneurs try to create wealth for themselves and their investors through subsidiaries and hedge funds, acting against clients.</nbsp;
Reminder, the SEC not only brought suit against Binance and Changpeng Zhao, but also demands an immediate asset freeze of the U.S. unit.</nbsp;
The reason for the TRO (injunction) demand was, among other things, the alleged misuse of customer funds on the platform. The exchange allegedly engaged in fictitious trading through the shell company Sigma Chain, and part of the capital was deposited in Zhao’s funds.