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There are multiple agencies that BOTH claim the right to regulate crypto AND refuse to actually do so. The SEC in particular is very vocal and brings cases aga

There are multiple agencies that BOTH claim the right to regulate crypto AND refuse to actually do so. The SEC in particular is very vocal and brings cases against crypto users. But is actively avoids any case where a court might be asked to rule on whether it actually has the authority or where someone with the money for a real legal battle is the defendant. On top of that, there are 50 state governments all randomly passing non-sense. This mess is fundamentally the fault of congress which has refused to address the question. And it is congress that should make this decision, not the courts, both in a legal and democratic sense. As much as I'd like to see regulators dragged over the coals for talking big, and offering (or demanding) registration but actually doing nothing, it's politicians that have watched this grey legal space turn into a black hole and done nothing.

flanked-evergl 4y ago
> There are multiple agencies that BOTH claim the right to regulate crypto AND refuse to actually do so. I bet all those political contributions that SBF made did not hurt his prospects in this regard: https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-biden-democratic-party-second-biggest-donor/ https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-bid... (https://archive.ph/BBpQN#selection-417.0-424.0 https://archive.ph/BBpQN#selection-417.0-424.0) > The 30-year-old Bankman-Fried has been a major force in Democratic politics, ranking as the party’s second-biggest individual donor in the 2021–2022 election cycle, according to Open Secrets, with donations totaling $39.8 million. That ranks only behind George Soros (about $128 million) but ahead of many other big names, including Michael Bloomberg ($28.3 million). What’s more, he had promised to spend far more on Democrats moving forward, predicting in May that he’d fund “north of $100 million” and had a “soft ceiling” of $1 billion for the 2024 elections. > This mess is fundamentally the fault of congress which has refused to address the question. And it is congress that should make this decision, not the courts, both in a legal and democratic sense. SBF was using congress as sock-puppets to ghost-write regulation: https://prospect.org/power/sam-bankman-frieds-multimillion-dollar-game/ https://prospect.org/power/sam-bankman-frieds-multimillion-d... > Crypto’s supporters in Congress are determined to ignore the massive gap in capacity between the two agencies; in fact, they likely understand that its incapacity is part of its appeal to FTX. A bill proposed by Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) seeks to grant the CFTC “exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset that is offered, solicited, traded, executed, or otherwise dealt in interstate commerce, including market activities relating to ancillary assets.” Perhaps in anticipation of such a move, FTX has stocked up its ranks with former CFTC officials. Former CFTC commissioner and acting chair Mark Wetjen is FTX’s head of policy and regulatory strategy. Ryne Miller, who was legal counsel to Gensler when he led the CFTC, is FTX’s general counsel. The Tech Transparency Project has also identified 14 other cases of CFTC alumni revolving into the crypto industry.
- skippyboxedhero 4y ago
  The current Chairman of the SEC worked with the CEO of Alameda's dad. Gensler initially didn't support the FTX bill, but was reportedly lobbying for it a few weeks before FTX collapsed (to be clear: this is a guy who was saying crypto should be regulated, SBF appears with a big chequebook, and he then says that his own regulator shouldn't be doing the regulating...not suspicious at all...).
  - flanked-evergl 4y ago
    Crypto may be a magnet for grifters, but in this case the grifters were all mainstream political-media-finance elite.
pavlov 4y ago
Regulators should have acted against crypto years ago. But these agencies have been walking on eggshells because the conservative Supreme Court is inclined to take away much of their enforcement powers. A lot of crypto money has flowed to mostly Republican politicians who support turning the SEC and FTC into hollow shells. Ultimately the criminal is to blame for the crime. Law enforcement can’t be everywhere actively preventing people from sending money to shady actors, as much as we try to build systems to that effect. Hopefully the FTX collapse is a reminder to both American parties to beware “innovators” bearing gifts, and for SEC to better use the powers they have (for now anyway).
- Tenoke 4y ago
  >A lot of crypto money has flowed to mostly Republican politicians This is such an ironically motivated thing to say in a thread about FTX given that SBF was Democrats' second largest donor.
  - kibwen 4y ago
    For some numbers: https://www.opensecrets.org/outside-spending/top_donors https://www.opensecrets.org/outside-spending/top_donors Bankman-Fried, the CEO of FTX, gave $35M to democrats. Ryan Salame, the "Co-CEO" of FTX, gave $18M to republicans, making him the 10th-largest republican donor (though this is slightly misleading as a comparison; republicans have more large donors than democrats, and Salame's donation would have been the 5th-largest if it had been for the latter). FTX was playing both sides.
    - leereeves 4y ago
      That doesn't seem to support the claim that "crypto money has flowed to mostly Republican politicians". Rather the opposite, as the amounts from those donors are $35M to Democrats vs $18M to Republicans. Are there some other donors who gave crypto money to Republicans?
      - kibwen 4y ago
psychlops 4y ago
Insightful comment. It makes sense for the agencies to want control and no responsibility, the best of both worlds. If we are waiting for Congress to actually act, then nothing will happen. They are too busy empowering the executive branch. Regulation won't be a silver bullet, plenty of scams remain in regulated finance that they are supposed to fix as well.
- skippyboxedhero 4y ago
  But they could establish rules that guarantee transparency. No regulator in the world has successfully stopped a scam before people lost money (afaik). But if you establish some regulatory framework in which people have to disclose information, establishes capital rules, etc. then it makes that less likely. Scams are a central component of financial innovation. But this specific kind of scam (stealing money from customers) is basically non-existent at scale today because of regulation.
  - JumpCrisscross 4y ago
    > no regulator in the world has successfully stopped a scam before people lost money It's impossible to prove anyone stopping anything before harms materialize because the prevented harms never happened. Regulators have definitely stopped scams early enough to reimburse victims. And where they couldn't (and where regulators were the ones to stop it) would have presumably kept going absent their interference. Americans are to a large degree shielded from FTX's collapse on account of regulation.
  - rattlesnakedave 4y ago
    >No regulator in the world has successfully stopped a scam before people lost money (afaik). But if you establish some regulatory framework in which people have to disclose information, establishes capital rules, etc. then it makes that less likely. Just trade on chain. Smart contracts are transparent by default.
    - vkou 4y ago
      If you're going to trade with smart contracts, the correct advice should be 'don't trade at all', because you're going to have your lunch eaten by software bugs.
TEP_Kim_Il_Sung 4y ago
Wasn't the SEC directly involved in one of the last few financial collapses? IIRC there was an whistleblower on how monitoring data could be annulled by deleting 3 files during transfer off an airgapped system. The SEC was all like 'it's a feature, not a bug'
jimz 4y ago
It's not really a legal grey area, congress deliberately writes vague laws so that administrative agencies can interpret and fill in gaps during their rulemaking process, which would then receive deference from courts if challenged and effectively become judge, jury, executioner. At this point I'm surprised that they haven't delegated out all the naming of post offices to some agency. Too bad the press release here is also hot garbage. For one, it's heavily based on speculative notions of what happened. Secondly, the withdrawal notice IS regulatory, and LedgerX is the legal entity that made the request. Changing it would look far more suspicious than following procedure. Also, what sort of regulation could have stopped this is very much an open question, since the whole phenomenon of affiliates, subsidiaries, and everything that led to FTX and FTX.US offering different products to different customers is entirely a product of anticipating or compliance with regulations, keeping in mind that FTX doesn't only operate in the US and some amorphous world but actual countries with their own regulatory frameworks. And the revolving door is effectively inevitable - those who are engaged in the field with any expertise on specific regulations is going to be a very small pool, and this goes for a lot more industries than CEXes, especially in technical fields and it doesn't even need to be rocket science. Courts and attorneys are setting a lot of junk precedent that will never be relevant or end up counterproductive because they don't know how CDNs work and some of the opinions from DMCA suits against absentee defendants are entirely based on infringement arising out of Cloudflare IPs while defining incidental (non-purposeful) availment of service as insufficient. Without a revolving door, it'll become farcical because you'd end up the equivalent of asking a dentist to do brain surgery. Without competent counsel, and facing down regulatory pressure, you will just lose the industry all-together, which is the apotheosis of an unregulated market because all activity is either underground or out of jurisdiction. The US is a big market, but nobody wants to go through what Ripple is going through, and calling it a regulatory failure when undercollateralized derivatives were offered on ftx.com but not ftx.us wasn't some 4D chess move but self-preservation, like Binance eventually did. I also can't figure out the logic behind the rationale that can include both "CFTC failed to regulate" and "CFTC should regulate more". 100 x 0 = 0. CFTC has acted incompetently before - like treating all holders of a token as an active member of a DAO in an enforcement action, seemingly forgetting that I can send anyone a few tokens, or hell, an offensive NFT for that matter, and there's not much you can do to stop that even if you catch it. Although reading bettermarkets I can't help but notice that its critiques are almost always on the regulators and their incompetence and the solution is... more regulation. They depict what can only be described as a fantasy world where crypto - that is all crypto, which is not a monolith - is the boogeyman while in reality, crypto is given the exact opposite of the too-big-to-fail treatment. > The key to that influence campaign is to buy as many former public officials and regulators as possible to gain access to their expertise, inside knowledge, and networks developed when they were supposedly working in the public interest. The importance of those revolving door hires cannot be overstated because they not only enable ready access to current policymakers and regulators, but also to the inside knowledge that enables crypto to precisely tailor and target their strategies to be optimally successful. Are they deliberately misleading the reader or genuinely talking out of their ass? You hire regulators for compliance, because the tech moves too quickly, and optimally successful strategy? Even MEV bots get salmonella. Not to mention that academia has much of that covered. Then, I checked out their CEO's litigation record on courtlistener and found that until last year he was at some big law defending predatory lenders. Well, there you go.

flanked-evergl 4y ago

> There are multiple agencies that BOTH claim the right to regulate crypto AND refuse to actually do so. I bet all those political contributions that SBF made did not hurt his prospects in this regard: https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-biden-democratic-party-second-biggest-donor/ https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-bid... (https://archive.ph/BBpQN#selection-417.0-424.0 https://archive.ph/BBpQN#selection-417.0-424.0) > The 30-year-old Bankman-Fried has been a major force in Democratic politics, ranking as the party’s second-biggest individual donor in the 2021–2022 election cycle, according to Open Secrets, with donations totaling $39.8 million. That ranks only behind George Soros (about $128 million) but ahead of many other big names, including Michael Bloomberg ($28.3 million). What’s more, he had promised to spend far more on Democrats moving forward, predicting in May that he’d fund “north of $100 million” and had a “soft ceiling” of $1 billion for the 2024 elections. > This mess is fundamentally the fault of congress which has refused to address the question. And it is congress that should make this decision, not the courts, both in a legal and democratic sense. SBF was using congress as sock-puppets to ghost-write regulation: https://prospect.org/power/sam-bankman-frieds-multimillion-dollar-game/ https://prospect.org/power/sam-bankman-frieds-multimillion-d... > Crypto’s supporters in Congress are determined to ignore the massive gap in capacity between the two agencies; in fact, they likely understand that its incapacity is part of its appeal to FTX. A bill proposed by Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) seeks to grant the CFTC “exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset that is offered, solicited, traded, executed, or otherwise dealt in interstate commerce, including market activities relating to ancillary assets.” Perhaps in anticipation of such a move, FTX has stocked up its ranks with former CFTC officials. Former CFTC commissioner and acting chair Mark Wetjen is FTX’s head of policy and regulatory strategy. Ryne Miller, who was legal counsel to Gensler when he led the CFTC, is FTX’s general counsel. The Tech Transparency Project has also identified 14 other cases of CFTC alumni revolving into the crypto industry.

skippyboxedhero 4y ago
The current Chairman of the SEC worked with the CEO of Alameda's dad. Gensler initially didn't support the FTX bill, but was reportedly lobbying for it a few weeks before FTX collapsed (to be clear: this is a guy who was saying crypto should be regulated, SBF appears with a big chequebook, and he then says that his own regulator shouldn't be doing the regulating...not suspicious at all...).
- flanked-evergl 4y ago
  Crypto may be a magnet for grifters, but in this case the grifters were all mainstream political-media-finance elite.

pavlov 4y ago

Regulators should have acted against crypto years ago. But these agencies have been walking on eggshells because the conservative Supreme Court is inclined to take away much of their enforcement powers. A lot of crypto money has flowed to mostly Republican politicians who support turning the SEC and FTC into hollow shells. Ultimately the criminal is to blame for the crime. Law enforcement can’t be everywhere actively preventing people from sending money to shady actors, as much as we try to build systems to that effect. Hopefully the FTX collapse is a reminder to both American parties to beware “innovators” bearing gifts, and for SEC to better use the powers they have (for now anyway).

Tenoke 4y ago
>A lot of crypto money has flowed to mostly Republican politicians This is such an ironically motivated thing to say in a thread about FTX given that SBF was Democrats' second largest donor.
- kibwen 4y ago
  For some numbers: https://www.opensecrets.org/outside-spending/top_donors https://www.opensecrets.org/outside-spending/top_donors Bankman-Fried, the CEO of FTX, gave $35M to democrats. Ryan Salame, the "Co-CEO" of FTX, gave $18M to republicans, making him the 10th-largest republican donor (though this is slightly misleading as a comparison; republicans have more large donors than democrats, and Salame's donation would have been the 5th-largest if it had been for the latter). FTX was playing both sides.
  - leereeves 4y ago
    That doesn't seem to support the claim that "crypto money has flowed to mostly Republican politicians". Rather the opposite, as the amounts from those donors are $35M to Democrats vs $18M to Republicans. Are there some other donors who gave crypto money to Republicans?
    - kibwen 4y ago

psychlops 4y ago

Insightful comment. It makes sense for the agencies to want control and no responsibility, the best of both worlds. If we are waiting for Congress to actually act, then nothing will happen. They are too busy empowering the executive branch. Regulation won't be a silver bullet, plenty of scams remain in regulated finance that they are supposed to fix as well.

skippyboxedhero 4y ago
But they could establish rules that guarantee transparency. No regulator in the world has successfully stopped a scam before people lost money (afaik). But if you establish some regulatory framework in which people have to disclose information, establishes capital rules, etc. then it makes that less likely. Scams are a central component of financial innovation. But this specific kind of scam (stealing money from customers) is basically non-existent at scale today because of regulation.
- JumpCrisscross 4y ago
  > no regulator in the world has successfully stopped a scam before people lost money It's impossible to prove anyone stopping anything before harms materialize because the prevented harms never happened. Regulators have definitely stopped scams early enough to reimburse victims. And where they couldn't (and where regulators were the ones to stop it) would have presumably kept going absent their interference. Americans are to a large degree shielded from FTX's collapse on account of regulation.
- rattlesnakedave 4y ago
  >No regulator in the world has successfully stopped a scam before people lost money (afaik). But if you establish some regulatory framework in which people have to disclose information, establishes capital rules, etc. then it makes that less likely. Just trade on chain. Smart contracts are transparent by default.
  - vkou 4y ago
    If you're going to trade with smart contracts, the correct advice should be 'don't trade at all', because you're going to have your lunch eaten by software bugs.

TEP_Kim_Il_Sung 4y ago

Wasn't the SEC directly involved in one of the last few financial collapses? IIRC there was an whistleblower on how monitoring data could be annulled by deleting 3 files during transfer off an airgapped system. The SEC was all like 'it's a feature, not a bug'

jimz 4y ago

It's not really a legal grey area, congress deliberately writes vague laws so that administrative agencies can interpret and fill in gaps during their rulemaking process, which would then receive deference from courts if challenged and effectively become judge, jury, executioner. At this point I'm surprised that they haven't delegated out all the naming of post offices to some agency. Too bad the press release here is also hot garbage. For one, it's heavily based on speculative notions of what happened. Secondly, the withdrawal notice IS regulatory, and LedgerX is the legal entity that made the request. Changing it would look far more suspicious than following procedure. Also, what sort of regulation could have stopped this is very much an open question, since the whole phenomenon of affiliates, subsidiaries, and everything that led to FTX and FTX.US offering different products to different customers is entirely a product of anticipating or compliance with regulations, keeping in mind that FTX doesn't only operate in the US and some amorphous world but actual countries with their own regulatory frameworks. And the revolving door is effectively inevitable - those who are engaged in the field with any expertise on specific regulations is going to be a very small pool, and this goes for a lot more industries than CEXes, especially in technical fields and it doesn't even need to be rocket science. Courts and attorneys are setting a lot of junk precedent that will never be relevant or end up counterproductive because they don't know how CDNs work and some of the opinions from DMCA suits against absentee defendants are entirely based on infringement arising out of Cloudflare IPs while defining incidental (non-purposeful) availment of service as insufficient. Without a revolving door, it'll become farcical because you'd end up the equivalent of asking a dentist to do brain surgery. Without competent counsel, and facing down regulatory pressure, you will just lose the industry all-together, which is the apotheosis of an unregulated market because all activity is either underground or out of jurisdiction. The US is a big market, but nobody wants to go through what Ripple is going through, and calling it a regulatory failure when undercollateralized derivatives were offered on ftx.com but not ftx.us wasn't some 4D chess move but self-preservation, like Binance eventually did. I also can't figure out the logic behind the rationale that can include both "CFTC failed to regulate" and "CFTC should regulate more". 100 x 0 = 0. CFTC has acted incompetently before - like treating all holders of a token as an active member of a DAO in an enforcement action, seemingly forgetting that I can send anyone a few tokens, or hell, an offensive NFT for that matter, and there's not much you can do to stop that even if you catch it. Although reading bettermarkets I can't help but notice that its critiques are almost always on the regulators and their incompetence and the solution is... more regulation. They depict what can only be described as a fantasy world where crypto - that is all crypto, which is not a monolith - is the boogeyman while in reality, crypto is given the exact opposite of the too-big-to-fail treatment. > The key to that influence campaign is to buy as many former public officials and regulators as possible to gain access to their expertise, inside knowledge, and networks developed when they were supposedly working in the public interest. The importance of those revolving door hires cannot be overstated because they not only enable ready access to current policymakers and regulators, but also to the inside knowledge that enables crypto to precisely tailor and target their strategies to be optimally successful. Are they deliberately misleading the reader or genuinely talking out of their ass? You hire regulators for compliance, because the tech moves too quickly, and optimally successful strategy? Even MEV bots get salmonella. Not to mention that academia has much of that covered. Then, I checked out their CEO's litigation record on courtlistener and found that until last year he was at some big law defending predatory lenders. Well, there you go.