Treasury Secretary Janet Yellen says FTX crash marked the Lehman moment for crypto as substantial harm hit investors

• Treasury Secretary Janet Yellen likened the collapse of FTX to that of Lehman Brothers in 2008.
• Substantial harm fell upon investors, especially those who weren't well informed about the risks, she said at the DealBook Summit.

Treasury Secretary Janet Yellen likened the implosion of Sam Bankman-Fried's FTX to that of the biggest domino to fall during the Great Financial Crisis.

"It's a Lehman moment within crypto, and crypto was big enough that you've had substantial harm of investors, and particularly people who aren't very well informed about the risks that they're undertaking," she said at the New York Times DealBook Summit on Wednesday.

The Treasury chief isn't the first commentator to draw comparisons between FTX and Lehman Brothers' 2008 bankruptcy, which triggered a market meltdown that led to a $700 billion government bailout for Wall Street's biggest players.

Still, Yellen maintained that while FTX's crash has been dramatic, it hasn't spilled over into the traditional banking sector.

It's important that regulators and firms ensure digital assets have the right safeguards for customers, but also that they remain open to financial innovations, she said. Two weeks ago, Yellen said that the collapse of FTX strengthened her view that the cryptocurrency market requires "very careful regulation."

"I have been skeptical, and I remain quite skeptical," she said Wednesday.

As things stand, FTX owes billions of dollars to potentially millions of creditors. Moving forward, Yellen emphasized that customer assets must be better protected.

"I think everything we've lived through over the last couple of weeks, but earlier as well, says this is an industry that really needs to have adequate regulation, and it doesn't," Yellen said.