Sign up for our newsletter.
Quality journalism. Progressive values. Direct to your inbox.
Follow us:
Common Dreams will never be locked behind a paywall because we believe our journalism should remain freely available to everyone ― not just those who can afford to pay. By becoming a sustaining monthly donor today, you can help make sure our work remains free for those who aren’t able to chip in.
To donate by check, phone, or other method, see our More Ways to Give page.
To donate by check, phone, or other method, see our More Ways to Give page.
U.S. Sen. Elizabeth Warren (D-Mass.) arrives for a Senate committee hearing on September 20, 2022 in Washington, D.C. (Photo: Kevin Dietsch/Getty Images)
To donate by check, phone, or other method, see our More Ways to Give page.
Kenny Stancil
U.S. Sen. Elizabeth Warren warned Tuesday in a Wall Street Journal opinion piece that if the federal government fails to adequately regulate the planet-killing cryptocurrency industry, it will “take down the economy.”
“History is littered with financial schemes promoted by criminals and charlatans who claimed that the latest and greatest tools had evolved beyond the need for regulation.”
Writing in the wake of the collapse of Sam Bankman-Fried’s digital asset exchange platform FTX, the Massachusetts Democrat argued that “crypto is following a well-worn path of financial innovations, such as subprime mortgages and credit-default swaps, that began with dazzling rewards and ended with crippling losses.”
“Proponents say crypto holds great promise for making the financial system more efficient and inclusive,” wrote Warren. “We’ve heard that story before. History is littered with financial schemes promoted by criminals and charlatans who claimed that the latest and greatest tools had evolved beyond the need for regulation or a cop on the beat. During the 2008 collapse and every financial crisis before that, these claims have proved dangerously delusional. Crypto is no exception.”
“FTX’s implosion should be a wake-up call,” Warren continued. “Regulators must enforce the law before more people get cheated, and Congress must plug the remaining holes in our regulatory structure—before the next crypto catastrophe takes down our economy.”
As the Journal reported on November 11: “FTX is the latest in a string of crypto companies seeking bankruptcy protection this year. Months ago, Mr. Bankman-Fried served as a lender of last resort to his industry, following the failure of other crypto companies. Its fortunes reversed in the past 10 days, after a CoinDesk report showed the depth of the relationship between FTX and Alameda, triggering a loss of faith in the platform by amateur and professional investors.”
According to the newspaper, which in another article cited unnamed sources familiar with the matter, “FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call.”
As the Journal noted:
FTX was previously seen as a rising star in the digital asset world. It attracted nearly $2 billion of investments from high-profile venture capital funds, hedge funds, and the Ontario Teachers’ Pension Plan. Many investors face a wipeout of their equity stakes in FTX as the exchange heads to the bankruptcy court. Venture capital firm Sequoia Capital said on Wednesday it is writing down its $150 million investment in FTX to zero.
Bankruptcy means that it could be a long time before individual investors and others owed their funds are able to potentially recover any of them, if ever. Creditors to Mt. Gox, the Japanese crypto exchange that failed following a 2014 hack, are still waiting for their funds almost a decade later.
“Crypto investors may find an uphill battle to get their crypto deposits back in bankruptcy proceedings,” the newspaper explained, “because their investments are likely to be treated as unsecured claims without collateral rights.”
“If Mr. Bankman-Fried and FTX executives committed fraud, then federal prosecutors should send them to prison.”
The sudden disintegration of FTX prompted the U.S. Department of Justice and the Securities and Exchange Commission to launch an ongoing investigation.
“Crypto executives who break the law are just like any other crooks, and the Justice Department should use its full range of tools, including criminal penalties, against them,” Warren wrote Tuesday. “If Mr. Bankman-Fried and FTX executives committed fraud, then federal prosecutors should send them to prison.”
“But FTX’s fall, like the collapse of Lehman Brothers before it, isn’t limited to one out-of-control company,” the progressive lawmaker stressed. “That means the Securities and Exchange Commission needs to suit up as well. Market manipulation, theft, insider trading—the SEC has decades of experience in rulemaking and monitoring retail investment and knows how to root out fraud and hold cheaters accountable.”
She continued:
The Treasury Department has also moved, using existing law to impose sanctions on two crypto mixing services, Blender and Tornado Cash, which were used to launder billions of dollars worth of virtual currencies, including hundreds of millions stolen by hackers. Crypto lobbyists howled, but Treasury was right to use its authority to force these entities to comply with the law. A few cases are good, but Justice, SEC, and Treasury are the frontline enforcers, and they need to act like it every single day. Federal agencies should use their expansive authority to crack down hard on crypto fraud.
Congress should back up these law enforcement agencies and financial regulators with more funding. Many crypto executives have armies of lawyers, PR advisers, and paid celebrity supporters, and they seem to think they can escape the laws that apply to everyone else. If the financial cops are going to take on crypto criminals, they need adequate resources to fight and win.
“It is past time for crypto to be subjected to the same basic rules as other financial activities,” Warren concluded. “If the crypto industry can succeed without stealing from investors or providing money-laundering services to terrorists and drug dealers, that’s great—but we won’t know that until the loopholes are closed and the laws are rigorously enforced.”
We’ve had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can’t do it without you. Thank you.
To donate by check, phone, or other method, see our More Ways to Give page.
Kenny Stancil · Nov 11, 2022
Robert Reich · Nov 22, 2022
Kate Kizer · Mar 13, 2022
Jake Johnson · Apr 15, 2022
Jessica Corbett · Nov 22, 2022
Brett Wilkins · Nov 22, 2022
Jessica Corbett · Nov 22, 2022
Brett Wilkins · Nov 22, 2022
Support our work.
We are independent, non-profit, advertising-free and 100% reader supported.
To donate by check, phone, or other method, see our More Ways to Give page.
Subscribe to our newsletter.
Quality journalism. Progressive values.
Direct to your inbox.
Subscribe to our Newsletter.
To donate by check, phone, or other method, see our More Ways to Give page.
Author
Administraroot
Related Posts
