WASHINGTON, December 14, 2022 – As legislators’ animosity toward digital assets builds following the FTX meltdown, Sen. Pat Toomey, R-Penn., on Wednesday defended the industry during a Senate Banking Committee hearing.

FTX, until recently a highly regarded crypto exchange, suffered an acute liquidity crisis and subsequently filed for bankruptcy in November. The crunch was triggered by reports that the FTX-linked investment firm, Alameda Research, relied heavily on FTX’s in-house token, FTT.

Since the collapse, intense scrutiny has revealed that FTX improperly financed Alameda’s ventures with billions of customers’ investment dollars. Bahaman authorities arrested FTX founder and former-CEO Sam Bankman-Fried on Monday, and he may face extradition to the United States.

Toomey, the committee’s ranking member, rejected proposals to “pause” cryptocurrency trading until a comprehensive regulatory scheme becomes law or eschew regulating of digital assets entirely to prevent their further legitimization. Toomey advocated instituting consumer protections and disclosure requirements that would still allow for healthy innovation in the crypto industry.

“With FTX, the problem is not the instruments that were used (digital assets), the problem was the misuse of customer funds, gross mismanagement, and likely illegal behavior,” Toomey said.

“The 2008 financial crisis involved obvious misuse of products related to mortgages,” Toomey analogized….