Recently, the US Securities and Exchange Commission regulator has directed public companies to check whether they need to disclose the effect from crypto turbulence to its investors.
Gary Gensler, SEC Chairman accused the agency of failing to prevent crypto companies from misappropriating consumer funds. Gary Gensler furthermore added that the SEC will increase enforcement if companies fail to obey existing regulations.
According to the new guidelines, companies will have to include crypto asset holdings in their public filings as well as the risk of FTX bankruptcy and other market developments. The company’s bankruptcy filings indicate that the company has more than 1 million creditors.
The SEC’s Division of Corporation Finance released a sample letter following a selective review of filings made under the Securities Act of 1933 and the Securities Exchange Act of 1934 that oversees the companies to disclose “such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading,”
SEC laid out information businesses may have to share with their investors, including whether the firms have any financially material exposures to counterparties that have filed for bankruptcy or become insolvent.
It advised companies to adopt these guidelines as they prepare documents “that may not typically be subject to review by the Division before their use.”
Also read: All about FTX Crash and Chaotic turn of Events: Crypto Doom
