In recent years, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have been cracking down on cryptocurrency fraud and abuse. This has resulted in enforcement actions against cryptocurrency companies, including exchanges, investment funds, and ICO projects.
Additionally, the CFTC has issued guidance on how it views cryptocurrency products and services. The supposedly hostile attitude of these authorities toward the crypto industry has made a one-time official of the US Department of Justice, Jason Weinstein, say that both the SEC and CFTC are not happy with the industry.
During a speech at Consensus 2023, Jason, who is also a partner at Steptoe, said that the SEC and CFTC have launched the worst attack he has ever seen on any industry. According to him, after spending 15 years at the Department of Justice (DOJ), he has never seen agencies so eager to demonstrate their strictness towards a legal industry.
He cited the case of FTX as a major trigger for regulatory actions affecting the industry, with more exchanges affected, such as Kraken and Coinbase. The actions taken to prevent the collapse of FTX were more about protecting politicians than sanitizing the industry. “The FTX case made the [regulatory environment] worse, but the FTX case is not about crypto,” said Jason. He linked it to Enron.
The Enron scandal was an accounting debacle involving Enron Corporation, an American energy company established in 1985. It stemmed from a intricate network of partnerships and special purpose entities (SPEs) employed to conceal debt and exaggerate profits.
This scandal inflicted a catastrophic effect on investors, employees, and the economy, resulting in the Sarbanes-Oxley Act of 2002 and the disintegration of Arthur Andersen.
FTX donations to politicians
It can be recalled that when FTX was going down, several revelations were made connected with the monies donated by SBF and FTX to politicians in different capacities. Some of them included those made to Democrats as well as to the President of the US.
Jason further narrated that the effect of the hostility is that several crypto firms are considering leaving the US, including old and new companies. These firms are not running away from regulations but from the difficulties the US authorities impose on them, stifling innovation and the ability to build.
Polygon’s Chief Policy Officer, Rebecca Rettig, who spoke alongside Jason, also highlighted the actions by the US authorities, saying it could cause massive abandonment of the country by crypto firms, which could benefit other nations that welcome them. “This is a global and borderless industry,” said Rettig.