SEC urges crypto companies to disclose exposure to recent market collapse

Hull Invest

The Securities and Exchange Commission (SEC) called We asked crypto companies to disclose their exposure to the recent market crash and detail the potential impact on investors.

The SEC’s Corporate Finance Division letter On Dec. 8, it asked the U.S.-based cryptocurrency firm to submit a disclosure document highlighting its business exposure to the recent market ramifications resulting from the FTX demise.

According to the SEC, disclosure documents It should explain whether the crypto company was directly or indirectly affected by the market collapse. Current financial situation and efforts to protect client assets.

Companies with indirect exposure are expected to highlight how the insolvency of a third party has affected their business operations, financial condition and client assets.

For companies facing liquidity risk, the application should detail whether they have stopped withdrawal requests and the impact on their financial situation.

Companies listing stocks and tokens should include how market disruptions have affected the price of their assets since the last reporting period.

Victims of the FTX Collapse

FTX was the third largest crypto exchange with 130 affiliated crypto companies before filing for bankruptcy on Nov. 11.

Due to the widespread contagion, BlockFi filed for bankruptcy on Nov. 28 and the Gemini exchange suspended its acquisition program due to Genesis Trading’s liquidity exposure to FTX.

Silvergate Capital reportedly held about 10% of its clients’ assets in FTX, while Galois Capital locked more than 50% of its capital in bankrupt exchanges.

In the weeks that followed, Canada’s Ontario Teachers’ Pension Fund announced it would write off its $95 million investment in FTX.

Similarly, large investment firm BlackRock has said its $24 million exposure to FTX will not affect its operations.

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