Among these efforts, US Senators Elizabeth Warren and Josh Hawley have introduced the PROOF Act, a legislative initiative specifically aimed at regulating cryptocurrency exchanges. The change comes after the very collapse of FTX and is meant to keep such events from happening again. Under the legislation, crypto exchanges would have to pass independent, monthly audits. These audits, dubbed “Proof of Reserves,” should be conducted by transparent and independent third-party auditing firms and filed with regulators.
The PROOF Act, introduced earlier this month, would be a big step toward promoting transparency and accountability in the crypto industry. This effort would address disclosure by requiring exchanges to issue periodic readily-verifiable proof of their assets. Lawmakers hope that the above measures are successful in protecting investors and ensuring a sound market.
At the same time, FTX has begun to aggressively pursue asset recovery through all means available including working directly with token issuers to recover funds. This move does not come without notice — it is an addition to ongoing legal challenges the company has already brought. At the same time, investigators have been piecing together the picture of Three Arrows Capital’s (3AC) shocking financial ties to FTX.
FTX’s third biggest loss came three times when 3AC raised its original claim of $120 million all the way up to $1.5 billion. Beyond existing legal action, the firm is working with other token issuers and seeking to return the most assets possible.
"We urge token and coin issuers to return assets that rightfully belong to FTX, and are willing to initiate litigation barring adequate engagement. Our team continues to work tirelessly to maximize recoveries for the FTX Estate and return funds to creditors, including by filing two complaints against issuers who have repeatedly ignored our attempts to engage" - The FTX Estate’s statement.
The aftermath of FTX’s implosion has already begun to push Congress into action, underscoring the necessity for comprehensive regulatory oversight in the burgeoning cryptocurrency market. The intent here is to not have a repeat of something like the collapse of FTX.
