The cryptocurrency industry is on a path of financial innovation that starts with “exciting rewards” and ends with “crushing losses.” This opinion was expressed by a member of the US Senate Banking Committee Elizabeth Warren in her article for The Wall Street Journal.
FTX’s collapse should be a wake-up call. @SECGov,@TheJusticeDept & @USTreasury should use their expansive authority to crack down hard on crypto fraud. Congress must close loopholes & back up these financial cops on the beat with more resources.
My operation: https://t.co/ARdtun2pAb
— Elizabeth Warren (@SenWarren) November 22, 2022
The reason for the publication was the collapse of FTX. Discussing the implications and risks of digital assets in general, Warren compared the latter to subprime mortgages“penny» shares and credit default swaps.
“Proponents say cryptocurrencies have great potential to make the financial system more efficient and inclusive. May be. But we’ve heard this story before. […] During the crash of 2008 and all previous financial crises, such statements proved to be dangerously delusional. Cryptocurrency is no exception,” the senator wrote.
In her opinion, the incident with the empire of Sam Bankman-Freed is a “wake-up call” for the authorities. Warren drew a parallel between FTX and Lehman Brothers, hinting at the risks of “infecting” the ecosystem:
“[…] Congress must plug the remaining holes in the regulatory structure before the next crypto disaster destroys our economy.”
Warren recalled the measures of the US Securities and Exchange Commission (SEC) in relation to unregistered ICOs and the efforts of the Treasury in the fight against money laundering. As an example, she cited sanctions against mixers Tornado Cash and Blender.io.
“Crypto lobbyists howled, but the Treasury used its powers correctly to force these organizations to comply with the law. A few cases are good, but the Department of Justice, the SEC and the Treasury are on the front line and they need to act like this every single day, ”the committee member emphasized.
She called on federal agencies to “tighten the fight against crypto fraud” and Congress to support these efforts with additional funding.
“Finally, mining companies that pollute the environment and load power grids must disclose information about their emissions and energy consumption. […] The time has come for cryptocurrency to be subject to the same rules as other financial activities,” the senator concluded.
Warren’s article caused a resonance in the crypto community. Some supported her, citing much of the market capitalization as “smoke and mirrors“.
It’s possible that much of the market cap that we thought was real in crypto, was just smoke and mirrors. This creates so much uncertainty about where we go from here, and how long it will take to bounce back. unbelievable. This is why Elizabeth Warren kept warning us all year
— zeusJuice.Ξth (@ElectrikTwo) November 23, 2022
“That’s why Elizabeth Warren has been warning us all year,” a Twitter user wrote.
Others did not take the article so favorably. hinting to the existence of deeper problems and doubting the competence of a member of the banking committee.
Alarmist as always. You want to legislate through fearmongering.
The headline only shows you don’t even understand crypto.
— Omar at TX (@omarslopezarce) November 23, 2022
“Only the title already shows that you don’t even understand cryptocurrencies,” the author of the post noted.
Another commentator advised Warren understand the difference between centralized exchanges and decentralized finance. User under the nickname Chi999111 noted that FTX “has nothing to do with bitcoin.”
Respectfully FTX has no reflection on Bitcoin. FTX failed due to massive fraud. Bitcoin is person to person payment system in real time from a phone or laptop. Don’t confuse FTX with bitcoin or inherent risk unless you are actually protecting bankers
— Chris (@Chi999111) November 22, 2022
Warren has previously compared cryptocurrencies to the US mortgage crisis. In July, she called on Congress and the SEC to take a tougher stance on the industry amid problems with Celsius Network and a number of other companies.
Recall that US regulators have launched investigations into FTX, according to media reports.
According to Fortune, the US Department of Justice has everything it needs to initiate a criminal case against Bankman-Fried and other leaders of the bankrupt exchange.
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