Elizabeth Warren: Crypto giants ‘collapse under the weight of their own fraud’

Allison Morrow, CNN

Senator Elizabeth Warren, a longtime crypto critic, has warned that the recent turmoil in the digital asset space will only continue if a host of regulators do not step up investor protections.

“For all their talk of innovation and affordability, the giants of the crypto industry — from FTX to Celsius to Voyager — are crumbling under the weight of their own fraud, deceit and gross mismanagement,” she said.

“And when they sink, they take a lot of honest investors with them,” Warren, Massachusetts, added in comments Wednesday at an event hosted by the American Economic Freedom Project and Americans for Financial Reform.

FTX, Celsius and Voyager filed for bankruptcy last year as asset prices plummeted and the global cryptocurrency market cap plummeted by roughly $2 trillion. Federal prosecutors have charged several former FTX executives, including founder Sam Bankman-Fried, with orchestrating one of the largest financial frauds in US history.

The collapse of FTX in November triggered a contagion that is still spreading through the cryptocurrency markets, which remain largely unregulated and opaque.

Warren on Wednesday urged regulators, including the Securities and Exchange Commission and banking authorities, to redouble efforts on the tools they already have. They must protect consumers, educate investors and achieve “significant consequences” for attackers, she said.

“Crypto fraud is a big problem, but we can fix it,” Warren said.

The SEC has made a “good start” over the past two years, she said, keeping crypto volatility out of the traditional banking system and preventing bitcoin-traded funds from entering the market. And without directly naming Bankman-Fried, Warren praised the SEC for accusing “crypto scammers” of defrauding ordinary investors.

But the SEC can’t fix everything.

“All of our regulators need to get in the game,” Warren said, urging environmental and banking officials to step up.

“Cryptocurrency mining companies are polluting the environment, straining power grids and driving up utility bills in communities from Texas to New York,” she said. “Both the Department of Energy and the Environmental Protection Agency have the right to require crypto miners to disclose information about energy use and their environmental impact. “

Warren said the emergence of crypto-friendly banks has already opened up the traditional banking system to more risk, “raising the specter of a crypto crash that will leave American taxpayers at bay.”

“The job of banking regulators is to shield the banking system — and taxpayers — from the risk of cryptocurrency fraud. They have the tools and they must use them.

Finally, Warren said, wherever regulators lack the authority they need, Congress has an obligation to give agencies the tools they need to enforce the rules.

In her trademark serious tone, she acknowledged the crypto proponents who have long bristled at the idea of ​​stricter regulation.

Tighter regulations will give the industry a chance to “prove that it can deliver on its promise of innovation without ripping off investors or laundering funds for drug traffickers and terrorists,” she said.

“No financial industry should write its own scripts – you either follow the law or face harsh consequences for breaking it. Cryptocurrency is no different.”

The-CNN-Wire
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Elizabeth Warren’s post: Cryptogiants ‘collapse under the weight of their own fraud’ first appeared on KION546.

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