Earlier this month crypto publication CoinDesk released a bombshell report that called into question FTX’s liquidity and the health of SBF’s other main business, a hedge fund called Alameda Research.
Just days later, the CEO of Binance—arguably FTX’s chief rival—decided to liquidate roughly $530 million-worth of FTT, a utility token issued by FTX. Customers raced to pull out and FTX saw an estimated $6 billion in withdrawals over the course of 72 hours, which it struggled to fulfill.
The value of FTT plunged 32%. The next day Binance walked away from the deal, citing findings during due diligence, as well as reports of mishandled customer funds and the possibility of a federal investigation.
FTX, the hedge fund Alameda Research, and dozens of other affiliated companies filed a bankruptcy petition in Delaware on November 11.
Elevated to a high pedestal under the guise of “Effective Altruism,” the con-man known as “SBF” screwed over millions of innocent people and also severely tarnished then reputation of cryptocurrency exchanges—and the people who run them.
In response to the global financial fiasco, the Canadian Securities Administrators is warning investors that trading in crypto assets comes “with elevated levels of risk that may not be suitable for many investors, in particular retail investors.”
Generally speaking, CSA notes, the “value and liquidity of crypto assets are highly volatile.”
The council of the securities regulators of provinces and territories—which harmonizes regulation for Canadian capital markets—also warns that, in addition to the volatility factor, there are unregistered crypto asset trading platforms accessible by Canadians where safeguards that protect investors’ assets from loss and theft may not be in place.
“Crypto asset trading platforms that operate in Canada and trade securities or derivatives are required to comply with Canadian securities law requirements, including registering with securities regulators,” CSA explains. “This regulatory oversight plays an important role in investor protection.”
However, investors should know that registration “cannot eliminate all risks associated with crypto asset trading platforms.”
“Trading crypto assets … requires considerable time, knowledge, skill and research,” CSA affirms.
Here’s how Fintech.ca suggests protecting your assets.