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May 12, 2022

The Ongoing Crypto Carnage and Wealth Destruction Are Red Flags for the CFTC Regarding FTX’s Application for Auto-Liquidation of Retail Customers Bitcoin Futures Margin Accounts

WASHINGTON, D.C.— Better Markets President and CEO Dennis M. Kelleher issued the following statement on the filing of Better Markets’ Comment Letter to the Commodity Futures Trading Commission (CFTC) in response to the agency’s request for comment on FTX’s proposal to offer non-intermediated, margined clearing of Bitcoin futures products:

“FTX has filed an application with the CFTC that, if approved, will likely vastly increase the participation of retail investors in the cryptocurrency futures markets via cellphone apps without intermediaries but with around-the-clock, second-by-second auto-liquidation of their margin accounts.  The crypto carnage, volatility, and wealth destruction over the last few days and weeks are red flags as to the threats posed to customer protection and systemic stability by cryptocurrency investments.  This is remarkably reminiscent of the “meme stock frenzy” of early 2021, a basket of which are now down more than 60% and resulted in billions if not tens of billions of dollars in customer losses.

“The CFTC must exercise extreme caution, require FTX to provide more information, and engage in a formal rulemaking before acting on the application.  Specifically, the CFTC should require FTX to show how it’s proposed model would have performed second-by-second, hour-by-hour, and day-by-day over the last several weeks during this tumultuous period in the crypto markets.  This would be a live stress test of FTX’s representations, estimates, and guesses about how its model will perform and the concrete impact on its customers’ accounts.  Given FTX is proposing to eliminate intermediaries, undertake real-time margining, and auto-liquidate customer accounts, this would provide invaluable information on FTX’s proposal to the CFTC and the public.

“With that information, the CFTC could propose a rule establishing a comprehensive framework that protects market participants, particularly retail customers, and the financial system from the many risks that FTX’s application represents.  We also call upon the CFTC to revisit its earlier decision to allow futures trading on Bitcoins in the first instance.  That decision failed to properly follow the applicable legal standards and ignored the primary role of the futures markets as venues for commercial enterprises to hedge and manage risk.”

Read our full comment letter here or click the button below.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit



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