The Senate Banking Committee is in the middle of a consequential “Investigating the Collapse of FTX” hearing that has come just days after Sam Bankman-Fried, the former CEO of crypto exchange FTX, was indicted for money laundering and other federal offenses.
FTX’s collapse affected the pocketbooks of more than a million people globally, so to say this hearing is important for protecting consumers and the financial markets is an understatement. Unfortunately, however, it appears that members of Congress are taking a mixed bag approach to addressing the issues posed by SBF and his former company.
Some members are using this moment to promote the public welfare. They are asking questions that will help get to the bottom of the fraud that SBF and the rest of the FTX team perpetrated, all while promoting reform solutions that will help to ensure a financial scandal of this scale never happens again.
Others, however, of the “never let a good crisis go to waste” variety are playing the typical West Wing-like Washington, D.C. political games, seemingly to shield themselves and their friends from accountability. These cowards are pointing the blame at the entire cryptocurrency industry instead of their convenient turning of the other cheek when it came to choosing to scrutinize their seeming political allies (and, in many cases, donors) at FTX months ago before this crisis transpired.
One of them is Sen. Elizabeth Warren (D-MA), who continues to reflexively call for new regulations on the whole cryptocurrency industry, including through a new bill she introduced titled The Digital Asset Anti-Money Laundering Act. But shouldn’t Congress first investigate what Sen. Warren and other far-left regulators were up to before FTX and its sister firm, Alameda Research, collapsed before they dismiss the viability of an entire marketplace?
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Where was the Warren-endorsed Securities and Exchange Commission Chairman Gary Gensler? He was nowhere to be found when it came to FTX oversight.
Perhaps his questionable ties to Alameda Research had something to do with his inaction. Before joining the SEC, Gensler served as a Massachusetts Institute of Technology economics professor under Glenn Ellison, the father of Alameda CEO Caroline Ellison.
Where was Warren’s prodigy, Rohit Chopra, the Director of the Consumer Financial Protection Bureau (CFPB)? While he has a strong record of releasing statements on many issues outside of his jurisdiction, he clearly failed to protect vulnerable consumers from crypto fraud.
Where was Congress? As FTX and its associates hired lobbyists and spent millions backing politicians in both parties, including Sen. Warren, the House and Senate sat idly by. Democratic Congressional Campaign Committee chair Sean Patrick Maloney introduced a crypto bill and coincidentally received the maximum allowable in contributions from SBF. House Financial Services Chair Maxine Waters wrote a bill that would give FTX access to Federal Reserve master accounts. FTX’s Joe Bankman, SBF’s father, helped draft Warren’s tax bill.
These are the very people who will write and implement the new crypto regulations Sen. Warren is clamoring to get on the books. Is that really in anyone’s interests?
Calling the crypto industry dangerous is as absurd as doing the same to the healthcare or oil industries over scandals. Individual actors within them may be problems — they may have even caused economic crises for thousands of Americans — but the sectors themselves are sound.
No one banged pots and pans to stop the oil and gas industry after the Enron Scandal, and no one called for the end of healthcare as we know it after the last fiscal year’s 336 cases of fraud. Instead, they called to hold those who were responsible accountable.
With respect to FTX, Sen. Warren is seemingly quick to inoculate herself by calling for more regulations. But Congress must first investigate what regulators and some of their colleagues were — or were not doing — to stop this collapse before it began. That will do far more for consumers than passing even more “reform” bills that may or may not have been written by other nefarious crypto lobbyists.
Before this hearing’s end, here’s to hoping members of the Senate Banking Committee at least make their desire to uncover every unidentified FTX stone known before they consider passing new legislation. It’s the only thing that can stop another financial scandal — crypto or otherwise — from occurring in short order.
Jerry Rogers is vice president at the Institute for Liberty and the founder of Capitol Allies, an independent, nonpartisan effort that promotes free enterprise. He’s the host of the ‘Jerry Rogers Show’ on WBAL NewsRadio. Twitter: @JerryRogersShow
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