As the U.S. Securities and Exchange Commission (SEC) continues its aggressive actions against digital asset firms, observers are keen to point out what they perceive as a misinformed stance of the regulator. Caitlin Long, the chief executive officer of Custodia Bank, is the latest to slam the financial watchdog and lawmakers on the recent actions against crypto companies.
A Misguided Move
According to the head of Custodia Bank, Caitlin Long, the recent approach targeted at digital asset services providers as undertaken by the SEC and the U.S. Congress can be termed a “misguided crackdown.” The CEO added that she had previously warned Washington D.C. about major frauds by the now-bankrupt crypto firms before their eventual collapse.
In a recent blog post, Long went hard on the U.S. government for its approach to regulating the crypto sector and failing to protect investors while isolating good actors from the ecosystem. She noted that Washington’s approach is akin to pushing risks to the shadows and leaving the regulatory bodies to chase perceived violators as risks continue to pop up in places least expected.
Long cited her crypto custody firm as the right approach to issues by calling out the bad actors and focusing on building a legal and compliant system that pushes scams to the trash. She believes that policymakers, rather than focusing on assisting innovators, are bent on killing the honest ones among them.
The CEO claimed that all efforts she put into collaborating with the government agencies had been thrown out of the window. She mentioned the unpleasant run-ins her company has faced from regulators as of late.
“Custodia was a target of attack by the government, the Federal Reserve and other lawmakers who conflated the firm’s non-leveraged 100% liquid and solvent ties with FTX on the floor of the U.S. Senate.” She added that policymakers had mocked Custodia for coming through the front door to ensure it became a federally regulated entity.
Long’s sentiments were echoed by prominent players in the crypto industry, especially Brian Armstrong, the CEO of Coinbase.
Ignoring Red flags
On her official Twitter handle, Long explained that months before FTX’s implosion and that of several other crypto exchanges last year, she and others had attempted to warn Washington of the looming dangers and help regulators stop frauds but without success.
In a daring move, the CEO of Custodia Bank publicly disclosed that she had forwarded evidence of glaring crimes committed by an unnamed crypto firm to law enforcement long before the same company imploded.
Responding to Long’s Twitter post, Kraken CEO Jesse Powell corroborated her statement by adding that he knows how frustrating it is to have pointed out red flags about illegal activities only to be ignored by those who should take action.
Powell added that it is complicated because the actors in such activities are everywhere, and the regulators have yet to use them as examples for years.