Citadel's billionaire founder and CEO Ken Griffin has weighed in on FTX's speculator collapse, calling on American regulators to cooperate with each other to better supervise the crypto industry.
"The turf war by American regulators has got to end. It's just preposterous," Griffin said Tuesday at the Bloomberg New Economy Forum in Singapore. "Without naming the agencies, they all dance around who owns what. The bottom line is American investors have really gotten hurt to the tune of hundreds of billions of dollars in declining market cap of crypto over the last two years. That really strikes at the entire core essence of what investor protection is all about."
Market observers have suggested that there might be a turf war brewing between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) over which regulator should take the lead when it comes to cryptocurrencies. Last year, CFTC's then-acting chairman and now chairman Rostin Behnam said that the agency should be the primary regulator of crypto markets. SEC chairman Gary Gensler, meanwhile, has maintained that many crypto assets are considered securities.
FTX's bankruptcy has shaken investor trust, said Griffin. "FTX is one of the absolute travesties in the history of financial markets," he said. "People are going to lose billions of dollars. That undermines trust in all financial markets."
FTX filed for bankruptcy protection on Friday due to a sudden liquidity crunch. The crypto exchange reportedly tapped customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting up its implosion. Griffin said there is no doubt customer assets were used to make investment decisions in favor of FTX's shareholders, which didn't work, at the expense of customers. "That's not permitted in America. You cannot use your customer assets to engage in proprietary trading. That's a huge no-no," he said.
Griffin also noted an obscure $7 million holding called "TRUMPLOSE" on the FTX's balance sheet. He said FTX crossed into territory "that all of us are worried about," also noting that FTX CEO Sam Bankman-Fried was the second biggest donor to Democratic candidates.
"Those are really really ugly facts when you see a fraud of this magnitude having played out and you find no regulators were there to prevent it. That is a really really tough story," he said.
Asked whether Citadel, the world's largest market maker, was interested in replacing FTX's name on the Miami Heat basketball team's arena, Griffin said, "it appears that having your name on a stadium is really bad karma."
Griffin said he would rather focus on building his new corporate headquarters in the city. "We're so proud to be a part of that community and call Miami home," he added.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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