Feb 19, 2023

DC Slammed for Ignoring Crypto Fraud Warnings

Caitlin Long, the CEO of Custodia Bank, has sounded the alarm on the current state of crypto regulation in Washington D.C. In a recent blog post, she has slammed regulators and lawmakers for their “misguided crackdown” on the crypto sector and ignoring her warnings of major “fraud” allegedly conducted by now-bankrupted entities.

Long has been a vocal advocate for the crypto sector, trying to build a lawful, compliant alternative that relegates scams to the trash heap. But despite her efforts, she has faced attack from the White House, the Federal Reserve Board of Governors, the Kansas City Fed, and Senator Dick Durbin.

Long has also revealed that she has “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.

In her blog post, she wrote: “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.”

The Custodia Bank CEO also noted that calls for a crackdown today are coming from many of the same policymakers who were charmed by the fraudsters. She added that: “In a 180-degree turn, they’re now throwing the baby out with the bathwater.”

Caitlin Long’s comments echo those of Coinbase CEO Brian Armstrong, who has criticized the lack of regulatory clarity in the U.S. and what appears to be a “regulation by enforcement” approach.

In the wake of the SEC’s move to shut down Kraken’s staking services on Feb. 9, Armstrong lamented that: “Today’s regulators and lawmakers in Washington are no doubt embarrassed that they failed to stop the criminals of crypto. DC is demanding scalps.”

Kraken co-founder and CEO Jesse Powell also corroborated Long’s statements, 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 crypto sector is in desperate need of clear, comprehensive regulation that will protect investors and encourage legitimate actors in the space. However, the current situation in Washington D.C. is far from ideal, with regulators and lawmakers seemingly unwilling to listen to the warnings of those in the know.

This is a major concern for those looking to promote, market, and sell NFTs, as well as those seeking to work with a web3 agency. Without clear regulations and guidance, it is difficult for crypto companies to operate in a compliant manner, leaving them open to potential legal action.

It remains to be seen if Washington D.C. will take heed of the warnings from Caitlin Long and others in the space. Until then, those looking to engage in NFT marketing, or any other form of crypto promotion and marketing, should proceed with caution.

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