In the wake of the FTX implosion, the federal government is about to make a decision to crack down on cryptocurrency regulation while FTX & Alameda Research executives roam free. The idea of increased consumer protection is understood. But is this a setup?
On December 6th at the Goldman Sachs Group financial conference, the CEO of Intercontinental Exchange Inc. (ICE) Jeffrey Sprecher spoke, stating “crypto assets are going to be regulated and dealt like securities”. Known cryptocurrency skeptic Senator Elizabeth Warren was also in attendance.
CEO Sprecher explained that new regulations aren’t really necessary, because the framework for regulating cryptocurrency is already in place, and just needs to be more strictly enforced. But what worries most is the agency that will be carrying out this order of tightened enforcement…
The Securities Exchange Commission.
This is somewhat disturbing. Why? Because the head of the SEC, Gary Gensler, has been spending his time over the past couple of years focusing on a lawsuit leveled against Ripple Labs (XRP), and a much smaller crypto project that goes by the name of “LBRY Inc.” (library).
LBRY Inc. is a blockchain-based file-sharing and payment network that powers decentralized platforms, primarily social networks and video platforms. The SEC has accused this project of operating without registering as a security. The company does not have deep enough pockets to fight the ruling.
Gary Gensler’s SEC has targeted these companies for their alleged violations of selling securities without a license, and the SEC head has mentioned this many times over the past few weeks when asked why the agency’s attention was not focused on the FTX fiasco.
The failure of Sam Bankman Fried’s operation cost consumers billions of dollars in losses. Most people believe that it was the job of the SEC to protect consumers of this exact type of fraud, which they did not. But is this the responsibility of the SEC?
It’s unclear exactly what the charge of the SEC should be in these situations, but it rubs salt into the wounds of those who lost significant amounts of money that the SEC did not pick up on all of the red flags before the collapse of FTX.
If SEC chair Gary Gensler was meeting with FTX officials as early as March of 2022, what were the meetings about? Rumors abound that the regulator was colluding with Sam Bankman Fried in order to draft legislation giving legal loopholes that would hand FTX a practical regulatory monopoly over the entire crypto market.
Others allege that Gary Gensler was making plans to draft a “no action letter” in response to a request by Sam Bankman Fried, which is basically reduces the chances of enforcement action against a particular company after considering certain facts and circumstances that are presented beforehand.
Depending on the news source, you will get varying answers & opinions, and even total dismissals of both alleged rumors. It still isn’t clear if any of the accusations are legitimate, or whether bear any truth at all.
But what rubs salt into the wounds of those who lost millions of dollars in investments at the behest of SBF is the fact that the SEC did not see the red flags of a company taking enormous operating risks which led to their implosion. If SEC chair Gary Gensler spent time in private meetings with this company, shouldn’t he have picked up on this before it completely devolved into absolute disaster?
Some think that the Securities Exchange Commission and the elected officials who are pushing for stricter regulations are in collusion with the perpetrators, due to the millions of dollars donated to both parties in the last election cycle. This belief is also reinforced by the fact that neither Sam Bankman Fried nor Caroline Ellision, or any of the employees of FTX & Alameda Research have been charged with crimes or arrested.
The slowness of the regulators and elected officials to act on this absolute disaster only intensifies the conspiracy theories, and leaves little confidence in the SEC as it makes plans to crack the whip on the cryptocurrency sector.
A regular citizen stealing a twenty dollar bill from the cash register of a grocery store would land themselves in jail. But two young “genius investors” stealing billions of dollars through a completely shady operation only seems to invoke a sympathetic response from the government and major media.
That’s why it gives the impression that the fox is about to take the nighttime security job within the chicken house when the SEC’s Gary Gensler ramps up his regulatory authority in response to the FTX fiasco.
For now, all we can deduce is that our government officials are corrupt, and consummate crooks. But if they actually do have an honorable agenda, we need some answers… NOW.
Carlton Flowers
The CryptoPro
https://www.youtube.com/c/CryptoProCarlton
