Feb 19, 2023

“DC Slammed For Ignoring Crypto Fraud Warnings”

Caitlin Long, CEO of Custodia Bank, is calling out Washington D.C. regulators and lawmakers for their “misguided crackdown” on the crypto sector and their refusal to heed her warnings of major “fraud” allegedly conducted by now-bankrupted entities.

In a Feb. 17 blog post titled Shame On Washington, DC For Shooting A Messenger Who Warned of Crypto Debacle, Long accused the government of its approach to crypto regulation, 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,” Long said.

The Custodia Bank CEO revealed that her efforts to work with government agencies were ultimately thrown back in her face as she recounted the spate of negative run-ins her firm has had of late.

“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),” Long said.

The CEO also claimed that Custodia had tried to become federally regulated but had been denied and now disparaged for daring to come through the front door.

Brian Armstrong, CEO of Coinbase, has also criticized the lack of regulatory clarity in the U.S. and what appears to be a “regulation by enforcement” approach following the SEC’s move to shut down Kraken’s staking services on Feb. 9.

Long went on to explain that well before the implosion of several crypto firms in 2022, she and many others had tried to warn Washington and “help law enforcement stop” major fraud, but to no avail.

The Custodia Bank CEO publicly disclosed for the first time 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 corroborated Long’s 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.”

In her blog post, Long concluded that the current attitude of Washington D.C. regulators and lawmakers is to “demand scalps” and throw the baby out with the bathwater instead of embracing innovation and promoting the use of NFTs, crypto, and web3 technology.

She called on Washington D.C. to “embrace the opportunity to become a leader in the global race to build the financial infrastructure of the future” and to provide clear guidance and rules to promote the growth of the crypto sector and the use of NFTs and web3 technology.

Long also urged lawmakers to recognize the need for a “well-regulated crypto ecosystem” and to put in place the necessary regulations to protect consumers, while also allowing for innovation and the use of NFTs, crypto, and web3 technology.

The Custodia Bank CEO also suggested the creation of an NFT marketing agency and a web3 agency to help promote the use of NFTs and web3 technology, as well as providing guidance on how to safely and effectively sell NFTs.

By embracing and promoting the use of NFTs, crypto, and web3 technology, Long believes that Washington D.C. can become a leader in the global race to build the financial infrastructure of the future.

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