FTX, which was one of the largest and most reliable cryptocurrency exchanges in the world in terms of transaction volume until the past weeks, declared bankruptcy after the disclosure of its wrong business practices, starting to cause problems for its users to withdraw money. The fact that the stock market, which uses investor funds for its own benefit, did not have the amount to pay back these funds, led to a rapid loss of confidence against all crypto currency exchanges. Attorney Kaan Özçelik from Usul Ventures & Danışmanlık examined crypto exchanges and investor security in the light of current news and stated that new regulations are on the way. He especially emphasized that losses similar to the FTX example may be experienced for non-regulated exchanges.
FTX exchange, which has been reported about illegal transactions in the past weeks, has increased the feeling of insecurity in the markets after negatively affecting the crypto market and causing an accelerating decline. Lawyer Kaan Özçelik, who closely follows the instant movements in the markets with his expertise in capital markets law and crypto money law, draws attention to the loss of billions of dollars of capital, and that the use of crypto money is inevitable in the increasingly digital world, but that investors should be especially careful in choosing the stock market in order not to encounter such problems again. He clarified the regulation principles expected in the stock markets.
“It is inevitable that cryptocurrency exchanges will face serious inspections”
Özçelik stated that with the bankruptcy of the FTX stock market in the last few days, the downward spiral and the atmosphere of insecurity will continue for a while, and pointed out that the consequences of the confidence crisis are not yet fully understood. Emphasizing that illegal transactions and liquidity problems pose a great threat to all cryptocurrency exchanges, he explained that the main step in overcoming the crisis is regulation:
“The working logic of cryptocurrency exchanges is often compared to traditional exchanges, but the main difference of exchanges can be understood from the way they overcome financial crises. As a matter of fact, stock markets are frequently audited. Cryptocurrency exchanges, on the other hand, are based on the idea of working independently from any center, allowing investors to trade cryptocurrencies with almost no supervision. Unfortunately, it is not possible for crypto money exchanges that operate systematically independently of the center to provide the necessary environment of trust without being regulated. As seen in the FTX example, it has now become inevitable that all cryptocurrency exchanges are subject to more serious and robust regulations so that investors do not suffer serious losses.”
“Transparency and user assets are among the first key audits expected to follow”
Attorney Ozcelik; Stating that keeping user assets in security accounts, especially in stable coins, in regulated markets will provide investors with a significant advantage in order not to experience crises similar to those in the FTX stock market, he summarized that inspections are necessary in any case: “For a lasting positive effect in the cryptocurrency markets, first of all, lost trust must be regained. At this stage, first the legislator and then the stock exchanges have a big job. The number of investors who argue that more serious audits should be implemented so that similar problems do not recur, has also increased, and it is known that many senior executives accelerated the work on this issue. In the future, cryptocurrency exchanges should face serious audits, especially on issues such as transparency and monitoring of user assets. Investor assets must be kept by institutions licensed and audited by the CMB and in a maximum security account, and this data must be published in a transparent manner. Eventually, the understanding that technology is decentralized and that markets should be under the control of a center has begun to be accepted by everyone.”