After one of the world’s largest cryptocurrency exchanges recently collapsed and filed for bankruptcy, Treasury Secretary Janet Yellen warned Americans to avoid investing in “extremely risky” financial products that are traded without proper supervision.
FTX fell apart within just one week in November and is now under investigation for securities fraud, along with its former Chief Executive Officer Sam Bankman-Fried. Along with other global experts who lament the lack of oversight, Yellen suggested that digital currency trading “lacks appropriate supervision and regulation.”
“I think this is a space where investors and consumers should really be very careful," Yellen told CBS News correspondent Nancy Cordes in a wide-ranging interview in Bali, where the Treasury Secretary was attending the G20 summit alongside President Biden. "We have very strong investor and consumer protection laws for most of our financial markets, but in some ways the crypto space has inadequate regulation."
The Biden administration has highlighted "regulatory holes that need to be filled for this to be a space where Americans can feel safe doing business," Yellen said in the interview.
While Yellen said that she was not offering Americans specific advice on how they should invest their money, she characterized cryptocurrencies as "extremely risky assets, and even dangerous in some ways."
As FTX tries to restructure as part of its Chapter 11 bankruptcy filing, the company’s creditors will be the first to receive any assets that a bankruptcy judge determines to be appropriate. Investors who had raised about $2 billion in venture capital will be next in line. Last are FTX account holders, people who used the platform to trade Bitcoin, Solana, and other digital currencies.
It could be years before they receive any money, if they receive anything at all.