Feb 19, 2023

DC Slammed for Ignoring Crypto Fraud Warnings

The crypto sector has been under fire recently due to a series of high-profile bankruptcies, and the CEO of Custodia Bank, Caitlin Long, is speaking out against the regulators and lawmakers in Washington D.C. for their “misguided crackdown” on the web3 space.

In her Feb. 17 blog post, Shame On Washington, DC For Shooting A Messenger Who Warned of Crypto Debacle, Long argued that the government’s approach to crypto regulation is failing to protect investors and alienating good actors in the space.

“Washington’s misguided crackdown will only push risks into the shadows, leaving regulators to play whack-a-mole as the risks continuously pop up in unexpected places,” she said.

Long has been trying to build a lawful, compliant alternative to scams in the crypto sector and her efforts to work with government agencies have been met with resistance.

“Custodia was simultaneously attacked by the White House, the Federal Reserve Board of Governors, the Kansas City Fed and Senator Dick Durbin (who conflated our non-leveraged, 100-percent liquid and solvent bank with FTX in a Senate floor speech),” she said.

The CEO of Custodia Bank is not alone in her criticism of the government’s approach. Coinbase CEO Brian Armstrong has also expressed his frustration with the lack of regulatory clarity in the U.S. and the SEC’s “regulation by enforcement” approach.

Long also revealed that she had “handed over evidence to law enforcement of probable crimes” committed by an unnamed crypto firm “months before that company imploded and stuck its millions of customers with losses.”

Kraken co-founder and CEO Jesse Powell responded to Long’s Twitter thread and corroborated her statements by noting that: “I can’t tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years.”

The Custodia Bank CEO concluded her blog post by stressing that the current regulatory environment is preventing the growth of the crypto sector, which is being driven by the increasing demand for Non-Fungible Tokens (NFTs).

“The need for NFTs and NFT marketing is growing exponentially,” she said. “Twitter NFT marketing, NFT promotion and NFT marketing agencies are popping up to meet the demand.”

Long believes that the current regulatory environment is stifling innovation and preventing the growth of the web3 space. She urged policymakers to embrace the crypto sector and the innovative solutions it can provide, rather than stifling it with “misguided crackdowns.”

“We need to promote the good actors and support the web3 agencies that are selling NFTs and offering NFT marketing services,” she said. “We must provide a safe, compliant and transparent environment for investors and innovators.”

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