A recent tiff between Mark Cuban, American billionaire, and former US Securities Exchange Commission (SEC) official, John Reed Stark, surfaced on social media. They disagreed over what led to the downfall of FTX and how the losses by US shareholders could have been mitigated.
Cuban, a Shark Tank star, insisted that if the US SEC had embraced regulations akin to those in Japan, US customers wouldn’t have been negatively affected by the FTX collapse. This statement was met with cynicism by Stark who asserted that laying the blame on SEC is somewhat unreasonable.
Stark, a known detractor of cryptocurrency, had formerly claimed the crypto environment’s lack of regulatory oversight, consumer protections, and auditing, made it not only risky and unsafe, but also a hotbed for fraud and deceit. Digging further on his scepticism, Stark issued a stark disdain about the formation of Central Bank Digital Currencies (CBDCs) claiming it’s not only purposeless, but also poses risks to the global finance industry.
Cuban, hitting back at Stark’s tweet, was of the view that Stark should look at how Japan is regulating the cryptocurrency sector. Since the fall of FTX, surprisingly none of the customers in Japan lost money according to Cuban. Cuban was of the opinion that, the SEC could have emulated their Japanese counterparts by defining lucid regulations that necessitated a clear segregation of company and customer funds, and a strict wallet mandate, which would have shielded the US customers from suffering losses in the FTX debacle.
Cuban’s contention about SEC culpability was, however, dismissed by Stark who argued that it was far-fetched to blame SEC for the likes of FTX, BlockFi, Celsius, Terra, Voyager, and many other crypto frauds. Stark, while acknowledging the SEC’s shortcomings, highlighted that the US financial watchdog had saved US clients “millions, perhaps even billions” from cryptographic loss.
Stark further highlighted that the SEC’s role was to monitor an industry that operated anarchically, especially one that lacked insurance, regulation oversight, or prohibitions on insider trading and market manipulation with the limited power it possesses.
In a rather bold statement, Cuban insisted that prompting companies like Coinbase or Binance to register was the poorest approach towards fraud deterrence. Pointing to Japan, he suggested that installing brightline investor-friendly regulations was the best strategy to curb crypto fraud.
In response, Stark was unconvinced; even with a robust compliance structure, he believes FTX wouldn’t have complied. He further argued firms like Beaxy, Bittrex, Coinbase, Binance, Voyager among others have intentionally ignored SEC directives to register, profiting as long as possible. The continuing enforcement actions on these firms do not shock him as they disregarded repeated warnings by the regulator. Both Binance and Coinbase currently face several charges, including operating as securities exchanges without proper registration with the SEC.
Source: Cryptonews
