An independent probe into the Security and Exchange Commission’s inability to prevent the unprecedented fall of the cryptocurrency exchange FTX is being demanded by a Democratic congressman.
Representative Ritchie Torres (D-NY) urged the Government Accountability Office (GAO) to launch an impartial investigation into the SEC’s actions—or lack thereof—in the months preceding FTX’s collapse last month in a letter.
The letter singled out SEC head Gary Gensler in particular for asserting to have sole regulatory authority over cryptocurrency exchanges while yet doing little to actually oversee them.
“If the SEC has the authority Mr. Gensler claims, why did he fail to uncover the largest crypto Ponzi scheme in US history?”Ritchie Torres
It is impossible to exert dominance and escape responsibility at the same time.
Gensler is consequently “singularly responsible for the regulatory failures surrounding the collapse of FTX,” the letter declared, without holding back.
Torres continued by questioning Gensler’s goals and character as well as his choice to look into Kim Kardashian rather than cryptocurrency exchanges like FTX.
For marketing EthereumMax, a cryptocurrency that the SEC ruled to be unregistered securities, Kardashian was assessed a $1.26 million punishment in October. An unusual move in the generally dry world of securities regulation, the SEC released a colorful video starring Gensler the day before the charge to raise the notice of the action.
Torres wrote that the SEC’s guiding premise should be investor protection rather than promoting the political appointee in charge.
The letter also hinted at strife within the SEC’s own ranks, charging Gensler’s actions with inciting insurrection among his employees.
“Mr. Gensler’s leadership has left the career staff at the SEC fundamentally demoralized to an extent rarely seen, with the SEC Inspector General reporting the highest attrition rate in a decade.”Ritchie Torres
Gensler’s approach is “not a good way of regulating,” according to SEC Commissioner Hester Peirce, one of Gensler’s colleagues, who earlier told Decrypt that many people have justifiably “given up on us.”
“To what extent has Mr. Gensler’s demoralization of his own workforce crippled the Commission in the performance of its duty to protect investors? The public deserves an answer.”Ritchie Torres
Although the SEC has been looking into the cryptocurrency exchange for some time, no fines or charges have been brought against FTX. But following FTX’s collapse, the Department of Justice and the Commodity Futures Trading Commission (CFTC) have already opened inquiries into the defunct $32 billion monster.
The SEC might have also lost control of overall crypto regulation. The majority of regulatory control over crypto would be given to the CFTC under a bipartisan Senate plan that has not yet been put to a vote.
Representative Torres presented two bills to the House that would immediately implement restrictions for cryptocurrency exchanges.
Information from Decrypt