In an outstanding piece by Robin Wigglesworth of the Financial Times, the outlet covers the CFTC’s failures when it comes to FTX. Better Markets’ work on FTX’s collapse is cited.
Below are several excerpts from the story:
Yes, the CFTC might not have been able to prevent the FTX debacle. Frauds happen. But the agency has consistently acted as a friendly champion of a fraud-riddled dumpster fire it purportedly wants to supervise. As Dennis Kelleher of non-profit investor advocacy group Better Markets put it in a recent report:
“Rather than aggressively regulating crypto and skeptically scrutinizing its claims, the CFTC has spent most of its time cheerleading the industry and trying to expand its jurisdiction rather than worrying about investor, customer, and markets protections.”
That crypto should seek to exploit the potential for regulatory arbitrage is understandable. But the willingness of the CFTC to debase itself as a willing accomplice in the process has been eye-catching. Here’s Kelleher of Better Markets again:
“The CFTC is the smallest and least funded financial regulator. Crypto believed it would be the easiest to capture, dominate, manipulate, and keep defanged. Confirming that view, the CFTC has been only too happy to join the industry in what is little more than a transparent jurisdiction-expanding power grab. The shamelessness of this reached its apogee when the CFTC’s Chairman not only de facto endorsed pending legislation that could have crippled the SEC’s ability to police the capital markets (the Lummis/Gillibrand bill), but also claimed that Bitcoin would double in price if his agency was its regulator.”