Zinger Key Points
- The FTX bankruptcy and collapse has led to new talk in Congress on regulation of cryptocurrency.
- One member of Congress is ramping up his criticism of the crypto sector.
A U.S. Congressman who has been critical of the cryptocurrency market is speaking out after the bankruptcy of crypto trading platform FTX. Here’s what he said.
What Happened: Liquidity concerns, high debt levels and the collapse of the FTX Token FTT/USD preceded FTX filing for bankruptcy last week.
The bankruptcy has been widely followed by analysts, investors, cryptocurrency holders and members of Congress. One congressman is using the bankruptcy as an opportunity to call out the sector.
“The sudden collapse this week of one of the largest cryptocurrency firms in the world has been a dramatic demonstration of both the inherent risks of digital assets and the critical weaknesses in the industry that has grown up around them,” Congressman Brad Sherman said.
Sherman, who is a U.S. Representative for the state of California, said that the amount of the collapse is not known but is expected to be “tens of billions of dollars in losses.”
“It is crucial that we develop a clear understanding of the chain of events and management to investigate the situation and make sure those responsible are held accountable.”
Sherman, an accountant, recently won re-election and has been a member of the House since 1997.
Related Link: FTX Had $8.9 Billion In Debt, Could That Be Why Binance Was Offering $1 To Acquire Business
Why It’s Important: Sherman has been critical of cryptocurrencies previously.
“For years I have advocated for Congress and federal regulators to take an aggressive approach in confronting the many threats to our society posed by cryptocurrencies,” Sherman said.
Sherman is calling on the SEC to take action now after the downfall of FTX.
“In the coming weeks, I also plan to work with my colleagues in Congress to examine options for federal legislation. To date, efforts by billionaire crypto bros to deter meaningful legislation by flooding Washington with millions of dollars in campaign contributions and lobbying spending have been effective.”
The Congressman also said it's important to look at both CEOs of FTX, not just Sam Bankman-Fried, in reference to co-CEO of FTX Digital Markets Ryan Salame.
“We have also seen Ryan Salame donate over $23 million to Republican candidates and campaign groups in 2022. When you examine FTX efforts to influence Washington, you have to look at both CEOs, not just the eccentric guy wearing the shorts.”
Sherman may be a familiar name to those in the cryptocurrency space. Speaking at the House Financial Services Committee in December 2021, the Congressman lashed out at the cryptocurrency sector.
Sherman said that Bitcoin BTC/USD could be displaced by Ethereum ETH/USD, which could be replaced then by Dogecoin DOGE/USD and others.
The Congressman attempted to name several made-up cryptocurrencies referencing Hamster Coin, Cobra Coin and Mongoose Coin.
“What could Mongoose Coin do to Crypto Coin?”
The comments from Sherman sent the price of an existing Hamster Coin up and also saw the creation of a Mongoose Coin that rallied.
The price of Mongoose Coin went up 4,000% on the first day and was up 80,000% at its highest point.
BTC Price Action: Bitcoin is down 3% to $16,474.86 on Wednesday. Bitcoin is down 3.57% over the last seven days and has fallen 65% year-to-date in 2022.
Read Next: What's Going To Happen To All The Companies FTX Bought?
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