Cryptocurrency News

Canada Is Doing All It Can to Prevent Another FTX

Canada is cracking down on crypto trading and tightening its rules due to the FTX financial collapse. The country is allegedly trying to do all it can to protect investors and ensure nothing like the exchange’s debacle can affect people within its borders.

Canada Is Fighting Potential Crypto Loopholes

The Ontario Securities Commission and securities regulators in Canada are keeping their eyes open and watching any unregulated digital currency exchanges within the country. Those that do not fall within the bounds of specific financial rules are required to provide financial agencies in Canada with plans to adhere to certain regulations granted they wish to continue serving their customers. They have approximately 30 days to submit these plans.

Among the rules presently being set in place that all trading platforms must adhere to in Canada is user funds cannot be mingled with the funds of the actual exchanges. At the time of writing, it is alleged that Sam Bankman-Fried – the former founder and chief executive of FTX – likely utilized customer monies to pay off loans for his other company Alameda Research and to buy luxury Bahamian real estate.

In addition, there can be no margin trading offering, nor can other types of debt be in the picture. Stan Magidson – CEO of the Alberta Securities Commission and chair of the Canadian Securities Administrators – commented in a recent interview:

Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada.

Granted any crypto exchange that’s being monitored doesn’t follow these rules within the next month or so, they are expected to wrap up all services to Canadians and block any future customers in the region.

The FTX scenario is likely to go down as one of the most embarrassing things to ever occur within the bounds of the crypto space. First arriving on the scene in 2019, the FTX exchange rose through the ranks and within three years, was considered one of the world’s top five digital currency trading platforms. Sam Bankman-Fried – the man who first gave the enterprise life – was lauded as a genius by many, and his net worth was in the billions prior to the firm’s collapse.

FTX Fell Fast

From there, however, things took a very nasty turn when he complained of a liquidity crunch online in mid-November of last year. He said that his company needed fast cash to stay afloat, and he initially approached Binance – his largest rival – about a possible buyout, though this failed to materialize, and the company was forced to enter bankruptcy proceedings.

Following this, SBF was arrested on charges of fraud for the issues related above. He is now awaiting trial at his parents’ house in California.

Tags: canada, crypto, FTX

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