Sen. Cynthia Lummis (R-WY) likened some aspects of FTX’s collapse to a Ponzi scheme, with the crypto exchange’s bankruptcy prompting her to review the crypto regulation bill she and Sen. Kirsten Gillibrand (D-NY) put forth in June.
“Certainly when you’re taking customer assets out of FTX, sending them over to shore up Alameda, that’s co-mingling assets that belong to your customers, that you are custody-ing for them— taking them and using them for your own purposes— borrowing from Peter to pay Paul,” the senator told Yahoo Finance in an interview Tuesday. “There are indications of some Ponzi scheme-like behavior. I think we’ll see regulators looking into this.”
FTX reportedly used its customer assets to shore up sister hedge fund Alameda Research’s liabilities. Alameda held a chunk of FTX’s illiquid token FTT, which plummeted in value after the world’s largest crypto exchange, Binance, said it was offloading the token, causing a run on the token and in turn FTX international.
“It was clearly activity that is within the regulatory parameters of the Lummis-Gillibrand bill that would have been illegal, and they would have been regulated,” she said of the events that led to FTX filing for bankruptcy on Friday.
