John Reed Stark, Mark Cuban Argue Over FTX’s Collapse

Mark Cuban and former securities official John Reed Stark have clashed once more, this time over who was ultimately to blame for FTX’s collapse and its impact on creditors.

During an acrimonious back-and-forth, Cuban argued that had the Securities and Exchange Commission of the United States established “clear regulations,” no one would have lost money from the collapse.

Stark asserted previously that cryptocurrencies and stablecoins, including digital currencies issued by central banks, do not address any problems and that the crypto industry operates without regulatory supervision, consumer protections, and auditing, among other things.

Cuban argued that Japanese regulators, a jurisdiction that is becoming increasingly Web3-friendly, are an example of an effective regulator.

“When FTX crashed, NO ONE IN FTX Japan LOST MONEY,” he declared. Stark, a cryptocurrency skeptic, retorted that it “seems a bit of a stretch” to blame the SEC for the failures of FTX, BlockFi, Celsius, Terra, and Voyager, which he referred to as “dumpster fires.”

While Stark acknowledged that the SEC is not always correct, he asserted that the agency saved investors “millions, if not billions” of dollars in crypto losses.

The former SEC official asserted that while the cryptocurrency industry seeks regulatory clarity, whenever rules are promulgated or proposed, “the crypto industry cries foul” and frequently responds by submitting a “flashy legal challenge to their enactment.”

Cuban responded by stating that the “best way” to prevent cryptocurrency fraud is to enact “clear-cut investor protection regulations.” He added:

“Anyone who doesn’t register is de-facto in violation, can’t operate and will be shut down. That’s how you protect crypto investors.”

However, Stark asserts that the SEC only assessed Binance, Coinbase, Beaxy, and Bittrex months after the regulator made it obvious that these companies were not in compliance. It is the second time in three weeks that the two have clashed over the regulation of cryptocurrencies.

On June 11, Cuban criticized the SEC for allegedly failing to provide a clear registration process for cryptocurrency firms.

Because the SEC’s “Framework for ‘Investment Contract’ Analysis of Digital Assets” document fails to explain how cryptocurrency firms can achieve compliance, he claimed it is “nearly impossible to know” what constitutes a security.