By Peter Whoriskey. December 14, 2022. (Washington Post).
The arrest of FTX founder Sam Bankman-Fried this week amid charges of a billion-dollar fraud corroborates long-standing warnings from critics who have likened the cryptocurrency markets to the Wild West. The question is: Where was the sheriff?
Leaders of the Securities and Exchange Commission, the nation’s primary financial regulator, have stated plainly for years that most digital coins are legally obliged to be registered with the government in the same way that stocks and bonds are. Yet only a tiny fraction have: Of an estimated 10,000 crypto tokens, fewer than 10 are registered with the SEC.
Among the exchanges such as FTX where crypto is traded, enforcement is likewise scant. None of the largest exchanges have registered with the SEC, and the agency has not taken legal action to force them to do so. This gap in enforcement means that thousands of entrepreneurs have been allowed to pitch crypto products without being compelled by financial regulators to disclose key information about the risks or even the identities of the people behind them.