Mr. Gensler has since spun Mr. Bankman-Fried’s fraud as a cautionary tale of the crypto “wild West.” The SEC chief claims crypto currencies are securities—ergo, exchanges and token developers must submit to agency regulation. But a federal judge this year disagreed, and Congress hasn’t given the SEC authority to regulate crypto.
Mr. Gensler has tried to regulate anyway, even before the FTX collapse. But regulators and prosecutors don’t need new powers to charge fraud under existing U.S. laws. And while Mr. Gensler charged crypto companies for marketing unregistered securities and operating unregistered trading platforms, that didn’t stop Mr. Bankman-Fried’s crimes.
Mr. Bankman-Fried scoffed last November to a reporter at Vox that regulators “don’t protect customers” and “can’t actually distinguish between good and bad.” He may have demonstrated his point. One question for Congress to investigate is whether Mr. Gensler’s preoccupation with expanding his regulatory and enforcement power caused the agency to overlook the FTX fraud in plain sight.
‘Enforcement 40’ for 2020
Join Us On LinkedIn
Join the Securities Litigation and Enforcement Group on LinkedIn