krblokhin
The U.S. Securities and Exchange Commission revealed new guidance Thursday advising publicly-traded companies to disclose to investors any potential impacts from the troubled cryptocurrency market.
Moreover, firms may be required to share information with their investors regarding their crypto holdings as well as their risk exposure to bankruptcies in the emerging space. They should also consider risks pertaining to a company’s liquidity position, according to the guidance.
The guidance comes after the once-mighty crypto exchange FTX (FTT-USD) filed for bankruptcy protection in November after traders rushed for the exit en masse upon discovery of its multi-billion dollar balance sheet shortfall, marking its demise as the industry’s most high-profile downfall. FTX is facing a number of federal investigations, including by the SEC.
That mess sent shockwaves through the crypto ecosystem and caused high-profile crypto lender BlockFi to file for Chapter 11.
“Recent bankruptcies and financial distress among crypto asset market participants have caused widespread disruption in those markets,” The SEC’s Division of Corporation Finance wrote in a sample letter. “Companies may have disclosure obligations under the federal securities laws related to the direct or indirect impact that these events and collateral events have had or may have on their business.”
The crypto market downturn has been highlighted by huge drawdowns in some of the largest digital tokens by market cap, including bitcoin (BTC-USD) dropping some 70% from its November 2021 all-time high.
A handful of U.S.-listed firms have already announced their direct exposures to Sam Bankman-Fried’s short-lived crypto empire, namely Coinbase (COIN) and Silvergate Capital (SI).
In November, SEC Chairman Gary Gensler said crypto investors need better protection.
