• Former FTX CEO Sam Bankman-Fried was released on bail after appearing in U.S. federal court in New York.
• The U.S. Securities and Exchange Commission (SEC) is increasing its scrutiny of audits of cryptocurrency companies.
• Documents show that Tron founder Justin Sun was a top client of crypto asset manager Valkyrie Investments, responsible for the vast majority of a key Valkyrie division’s assets under management.
The crypto markets have been volatile and unpredictable in recent months, with bitcoin having tanked 63% year-to-date. Crypto stocks, often seen as a proxy for digital assets, have suffered bigger losses than bitcoin. This has led investors to seek other ways to gain exposure to the crypto markets.
One such avenue was the recent news that former FTX CEO Sam Bankman-Fried had appeared in U.S. federal court in New York. Bankman-Fried was released on bail, with his release coming with a long list of requirements for him to remain free while he faces charges. These included not making financial transactions of more than $1,000, not opening new lines of credit, staying at home except to exercise, and going through substance abuse and mental health treatment.
In order to protect investors, the U.S. Securities and Exchange Commission (SEC) also announced that it was increasing its scrutiny of audits of cryptocurrency companies. Paul Munter, the SEC’s acting chief accountant, commented that investors “should not place too much confidence in the mere fact a company says it’s got a proof-of-reserves from an audit firm.” He added that having such a report “is not enough information for an investor to assess whether the company has sufficient assets to cover its liabilities.”
One of the most successful investors in crypto is Justin Sun, the founder of Tron. Documents recently revealed that Sun was a top client of crypto asset manager Valkyrie Investments, responsible for the vast majority of a key Valkyrie division’s assets under management. At one point in August, Sun had more than $580 million of bitcoin stashed with the asset manager.
Overall, investors interested in gaining exposure to the crypto markets must be extra vigilant when considering the various options available. While investing in bitcoin is still seen as a viable option, the SEC’s increased scrutiny of crypto audits must be taken into account when making any decisions. Investors should also be aware of the impressive track record of Justin Sun and other major crypto investors, but must do their own research to ensure they are making the right decisions for their portfolio.