Insider Reveals VARA’s Close Scrutiny of FTX Exchange After Bankruptcy

04/05/2023 13:06 • Metaverse Matters • 69 views

It is reported that, according to insiders, after the bankruptcy of the digital asset exchange FTX last year, officials of the Dubai Virtual Assets Regulatory Authority (VARA) asked for more information about its ownership structure, governance and audit procedure in recent weeks, and the person asked to discuss private deliberations anonymously. Three of the insiders said that VARA requires all international companies seeking permission to provide similar information.

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The Dubai Virtual Assets Regulatory Authority (VARA) has reportedly increased its scrutiny of the ownership structure, governance, and audit procedures of digital asset exchange FTX. This comes after the exchange’s bankruptcy last year. According to insiders who requested anonymity, VARA has asked for detailed information from international companies seeking permission to operate in Dubai’s virtual assets market.

Background

FTX is a cryptocurrency derivatives exchange that was founded in 2019 by Sam Bankman-Fried and Gary Wang. The exchange quickly gained popularity among traders due to its innovative features, such as a prediction market and leveraged tokens. However, in March 2020, FTX faced financial difficulties due to a significant drop in cryptocurrency prices, which caused traders to suffer large losses. FTX subsequently filed for bankruptcy, which left many investors in a difficult position.

VARA’s Investigation

Following FTX’s bankruptcy last year, VARA has reportedly become more cautious about allowing international companies to operate in Dubai’s virtual assets market. The regulator has requested more detailed information about the ownership and governance structure of companies seeking permission to provide services in the region. According to insiders, VARA is particularly interested in companies that have experienced financial difficulties in the past.

Ownership Structure, Governance, and Audit Procedures

VARA is known for its strict regulations when it comes to virtual assets. The regulatory authority requires companies to have a clear ownership structure, adequate governance mechanisms, and robust audit procedures. These requirements are in place to ensure that companies operating in Dubai’s virtual assets market are transparent and credible.

Importance of VARA’s Scrutiny

VARA’s scrutiny of FTX is significant because it signals that the regulatory authority is taking its role seriously. The exchange’s bankruptcy has raised concerns about the stability of virtual asset markets and the risks associated with trading in this area. By scrutinizing FTX and other companies seeking permission to operate in Dubai’s virtual assets market, VARA is sending a message that it will not compromise on its regulatory standards.

Conclusion

FTX’s bankruptcy has highlighted the need for robust regulations when it comes to virtual assets. The scrutiny by VARA is essential in ensuring that international companies operating in Dubai’s virtual assets market adhere to the highest standards. By setting a precedent, VARA can protect not only investors but also the reputation of the virtual asset market.

FAQs

Q1: What is FTX?
A1: FTX is a cryptocurrency derivatives exchange that was founded in 2019.
Q2: Why did FTX file for bankruptcy?
A2: FTX faced financial difficulties in March 2020 due to a significant drop in cryptocurrency prices, which caused traders to suffer large losses.
Q3: What is VARA?
A3: VARA is the Dubai Virtual Assets Regulatory Authority, which regulates virtual assets in Dubai.

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