WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President and CEO, issued the following statement in connection with the release of a Better Markets’ Fact Sheet on crypto, FTX’s collapse, SBF’s activities, the actions of the SEC, CFTC, and banking regulators on crypto, and the crypto industry’s use of the revolving door in their influence campaign in Washington. On Thursday morning, the House Financial Services Committee will hold a hearing that is expected to address a number of these issues.
“As policymakers continue to review the crypto landscape, including the actions of FTX and SBF, it is critical to understand and consider the actual facts, rather than self-interested spin, baseless claims, purchased advocacy, exaggerated hype, and pernicious PR. First and foremost, the current laws and rules are clear and more than adequate to address almost all of the lawlessness going on in crypto. The fundamental problem is that the crypto industry refuses to comply with those securities and commodities laws (that exist to protect investors, customers, and financial stability) and, therefore, the vast majority of crypto products are unregistered securities and commodities being illegally traded on unregistered exchanges. It is not that crypto can’t comply with the laws; it’s that they won’t for profit maximizing reasons.
“Second, FTX’s and SBF’s influence campaign was comprehensive, coordinated, and strategic, fueled by $100 million in campaign contributions, millions more for an army of lobbyists, and the widespread use of the revolving door, especially the hiring of at least 13 former officials from the CFTC. And they almost got away with it. That was facilitated by the CFTC Chair becoming SBF’s “key” regulatory and legislative ally, and the CFTC’s failure to properly scrutinize and evaluate FTX’s predatory proposal to radically change the structure and operations of systemically significant commodity clearing houses. There were ample red flags flying and the conduct that missed them should be thoroughly scrutinized and investigated.
“Third, regulators at the banking agencies and the SEC withstood enormous political and industry pressure and denied crypto access to and interconnections with the core of the financial and banking system. That’s the only reason the ongoing crypto carnage hasn’t turned into a financial crisis, crash and bailouts, which is what happened with subprime mortgages in the early 2000s leading directly to the 2008 crash. The industry should not now get a legitimizing legislative bailout, risking taxpayers and financial stability. Instead, policymakers should surge resources to the SEC and banking regulators so they can more effectively combat a dangerous, lawless industry pursuing a scorched earth litigation strategy.”
Those facts and many more are detailed in our Fact Sheet here.
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org
