Congressmembers Tried to Stop the SEC’s Inquiry into FTX

https://prospect.org/power/congressmembers-tried-to-stop-secs-inquiry-into-ftx/

by ourmandave • 4 years ago

255 83 4 years ago

prospect.org

ourmandave• 4 years ago

https://archive.ph/KeNum

dragonne• 4 years ago

FYI this site isn't paywalled, it just has an obnoxious popup.

neilv• 4 years ago

Let's not Friday (Holiday) News Dump this possible story.

If there's something to it, next week people will have more time to look into it, without it spoiling their turkey appetite.

themitigating8• 4 years ago

Not everyone celebrates Thanksgiving

hinkley• 4 years ago

If the topic is a US domestic matter, most of the people who need to pay attention do.

This idea that having accurate information about things happening on the opposite side of the world is going to change anything? You don't have to think about it for more than two seconds to see that's not true. It's an Illusion of Control.

Exposing something is only the first step do changing it. But you can expose things and not change a damn thing.

MetaMonk2• 4 years ago

"Blockchain Eight" when you coulda had "Chain Gang"? Cmon.

IfOnlyYouKnew• 4 years ago

It's a reference to the "Keating Five".

MetaMonk2• 4 years ago

Didn't know about that scandal, but it's also just standard to uncreatively (but tersely) name important events etc. with a structure of <noun/adjective> <number> (Boston Six, Gang of Four).

jmpman• 4 years ago

Just like the Keating Five. These politicians should be vilified.

ericbarrett• 4 years ago

The eight congressmen:

Tom Emmer (R-MN)

Warren Davidson (R-OH)

Byron Donalds (R-FL)

Ted Budd (R-NC)

Josh Gottheimer (D-NJ)

Jake Auchincloss (D-MA)

Ritchie Torres (D-NY)

Darren Soto (D-FL)

The signed letter: https://emmer.house.gov/_cache/files/0/c/0c7fc863-7916-4b19-...

mc32• 4 years ago

Their parties should kick them out and replace them with more principled people.

tartoran• 4 years ago

That would be ideal but in reality these party members raised money for the party so.. they’re in 0 trouble as far as their party is concerned. The system is a farting contest that enables this behavior. Solution would be to do away with the 2 party system and make parties more responsible with consequences as being completely voted out if corruption isn’t handled. Now both Reps and Dems are corrupted and they known we have no other choice

tsol• 4 years ago

The thing about democracy is, even if the people make a bad choice it's still democracy

rodgerd2• 4 years ago

Like... they guy running on whether he wants to be a warewolf or vampire? The lady worried about Jewish space lasers?

Just getting people who are sufficiently in touch with reality that they're merely corrupt seems like a win at this point.

Consultant32452• 4 years ago

No matter who you vote for, the government wins every election.

nradov2• 4 years ago

Political parties have no legal authority to expel a member from Congress. Parties are voluntary private organizations with no formal role in any branch of government. The most the parties can really do to punish a politician is to withdraw financial and organizational support, which might make reelection difficult.

joxel• 4 years ago

Au contrare, Ted budd just got promoted to senator.

MichaelCollins3• 4 years ago

This comment makes no sense in the context of America. I guess you're from a country with some sort of Parliamentary system where governments are formed when a party is elected?

In America, parties aren't elected and don't form governments. Accordingly, an American political party cannot kick out a congressman, much less replace one. To remove a congressman requires a two third vote (from congress, not from a political party); this never happens in the modern era without a criminal conviction as the impetus. And nether congress or a political party can simply bring in a new congressman; you'd need another election for that.

themitigating8• 4 years ago

If they punished them, especially in a way that would cause then not be funded in their next election, they could just switch parties.

JumpCrisscross2• 4 years ago

parties should kick them out and replace them with more principled people

Their parties could evict them. But they’d retain their seats. Their voters gave those to them.

scaredginger• 4 years ago

Why do they keep telling us bipartisanship is dead?

Xeoncross• 4 years ago

I think you'll find a lot of the things they tell us are wrong

smitty1e• 4 years ago

Because once Cthulhu devoured the Ds and Rs there was no "bi", only bones.

godzillabrennus• 4 years ago

80% is still agreed upon by the uniparty. It’s the fringes on either side that make it so the government can’t agree on the other 20%.

funstuff007• 4 years ago

because both parties can agree that the B in BIPOC stands for billionaires.

googlryas• 4 years ago

How much was donated to them versus other senators?

HarryHirsch• 4 years ago

A sufficient amount of money, clearly.

qup• 4 years ago

If one of the Ds or Rs was flipped, we could all condemn the most-guilty party with great conviction.

smt882• 4 years ago

I don't know anyone with basic knowledge of Congress who doesn't understand that lobbying heavily influences both parties, although not at all equally.

constantcrying• 4 years ago

Very glad to see that in the US political divisions can still be overcome and there can be a bipartisan effort to allow criminals to hide from the scrutiny of the SEC.

ekianjo• 4 years ago

Politicians right and left have no problem with taking a big check to further their own interests.

d1str0• 4 years ago

This is quite an inflammatory title by HN standards.

UberFly• 4 years ago

It's the same title as the article, but yea, click bait title all the same.

AnimalMuppet2• 4 years ago

In March. And not FTX specifically, but crypto in general.

So, as d1str0 said, yes, very inflamatory (and misleading) headline.

encryptluks2• 4 years ago

The headline is still accurate, as stopping SEC inquiry in crypto would have the same effect.

MichaelCollins3• 4 years ago

Accurate maybe, but very imprecise.

AnimalMuppet2• 4 years ago

Would an inquiry in March have prevented the FTX mess? Maybe. It would have been good to at least give it the chance.

But in the current situation, the headline reads like these 8 tried to stop an inquiry specifically into FTX after the collapse, which is totally not what happened.

themitigating8• 4 years ago

It's accurate but extremely manipulative because it implies this the congressman were directly helping FTX.

dylan6042• 4 years ago

"The March letter from eight House members—four Democrats and four Republicans—questioned the SEC’s authority to make informal inquiries to crypto and blockchain companies, and intimated that the requests violated federal law."

This wasn't an investigation into just FTX. This was a broader investigation into crypto companies, plural. The current post title of "Inquiry into FTX" seems to be editorializing. Dang must be slow on the tryptophan to not post the usual HN guidelines reprimand

alsetmusic• 4 years ago

It’s the title of the article which makes it appropriate here. That it’s a bad title, however, is not in dispute.

peyton• 4 years ago

I mean there’s zero mention of FTX in the letter. Perhaps a question mark is in order.

themitigating8• 4 years ago

I wouldn't blame the poster but the source which is using an extremely manipulative headline.

egberts1• 4 years ago

Paywall

racked• 4 years ago

Yes, the crypto world is a hornet's nest, but the non-crypto world is ruled by bankers with an ever-increasing thirst for control over our lives. (Read up about the Fed's new CBDC plans)

As far as I'm aware, Monero and cash are the only practical ways to pay anonymously.

So, who are worse? The congressmen who (perhaps in this case naively) tried to avoid overregulating crypto, or the remaining congressmen who continue to condone an economy completely manipulable by private bankers by way of the Federal Reserve?

brian-armstrong• 4 years ago

Regulating a sketchy Ponzi scheme with vaguely crypto trappings != regulating crypto

throwaway1777• 4 years ago

They both suck and both should be criticized. But also both crypto and banks are diverse and not all bad.

kelnos2• 4 years ago

Intent matters. Even if these congresspeople are correct that the SEC shouldn't be doing what they're doing, if the reason the congresspeople wrote that letter is because they received "donations" from cryptocurrency companies or PACs, then I think we should still give it some scrutiny.

spir• 4 years ago

There are politicians and media publications protecting Sam Bankman-Fried's criminality, but these congressmen aren't among them.

The letter in this article was written in March. FTX's long-term fraud has only been known since early November.

Dylan16807• 4 years ago

You don't have to know about specific bad actions to shield the entity that is doing them.

themitigating8• 4 years ago

True but it changes the amount of guilt right?

Maybe they were just helping companies donating to then, the letter is about cryptocurrenty in general.

JamesianP• 4 years ago

But if you fight against overzealous enforcement you will necessarily be shielding some bad actors along with the good.

Not that I'm personally against the SEC (and other agencies) crossing into crypto and interpreting their mandate broadly, rather than being overly conservative and waiting for new laws while the scammers run wild. But in other areas these paperwork demands could be a huge burden...

skippyboxedhero• 4 years ago

The SEC tried to stop the SEC's inquiry into FTX.

Gensler said earlier this year that the SEC should be regulating FTX. SBF unleashes his torrent of mid-term money and then Gensler was saying up until FTX went bust (he was reportedly lobbying for them a few weeks before) that it should be the CTFC's job (which was the position that FTX were lobbying for as they had also bought a few people at the CTFC).

Animats2• 4 years ago

"Enforcement powers, while conceptually broader with respect to non-SEC regulated entities, are still circumscribed by statute, federal judicial review, congressional oversight and the Commission’s own policies and procedures for initiating and conducting inquiries and investigations."

Now that's being squishy-soft on crime. That's the point to make when those members of Congress come up for re-election. They're soft on crime.

The basic law the SEC enforces, the Securities Exchange Act of 1934, is pretty clear on what's a security. The Supreme Court has clarified that. Investment of money, expectation of profit, common enterprise - it's a security. That's called the Howey Test. It's also been established that what you call it or how it works doesn't matter. There have been, over the years, many imaginative schemes cooked up to get around this. The Howey case involved tradeable orange grove harvesting rights in Florida. That was held to be a security.

The crypto crowd has been yammering for years "but this is different". Well, it's not.

The scams around crypto are classic. It's usually insiders stealing the money. The crashes are also classic. It's someone being over-leveraged when something goes down. This is not financial innovation.

BuyMyBitcoins• 4 years ago

”The crypto crowd has been yammering for years "but this is different". Well, it's not.”

In what way? Some cryptocurrencies have been declared securities, while many have not. Those such as Bitcoin and Ethereum have been around for long enough that if they were going to be ruled as securities via Howey, that would have surely been done by now.

JumpCrisscross2• 4 years ago

that would have surely been done by now

We are getting damn close to that being done through statute in the U.S.

Animats2• 4 years ago

That was done years ago. The SEC cracked down on initial coin offerings back in 2018. They're still working down the backlog.[1] The "cyber" enforcement staff was doubled a few months back to catch up.

The SEC does not consider Bitcoin to be a security because there's no "common enterprise". It's distributed more like a mined commodity. Miners are competitors. But where there's an issuer, or "minting", or "pre-mining", or anything like that, you can buy it, and it's expected to go up, it's clearly a security.

Etherium is in an interesting position with the shift to proof of stake. That may have made it a security, because it's now controlled by voting owners, just like a stock. So now there's a "common enterprise", unlike in the "mining" phase.

The big question now is exchange regulation. Are Bitcoin exchanges and brokers going to have to register with the SEC, pay for and be covered by SIPC insurance, and be regulated by FINRA? After FTX, that's probably coming. FTX acted like a retail broker, after all. Nobody runs Super Bowl ads or buys stadium naming rights for something sold only to institutional clients.

The law in this area looks at the economic realities, not the form. If it looks like a security, is marketed like a security, and is bought and sold for the same reasons as securities, it's a security. Doesn't matter what you call it.

[1] https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...

zx8080• 4 years ago

Tell me it's not a corruption.

themitigating8• 4 years ago

I can tell you the headline is manipulative BS because they were questioning the ability of the SEC to investigate these types of companies in general and they didn't specifically mention FTX

woodpanel• 4 years ago

You know things are looking bad if out of the gazillions of $ FTX laundered into the DNC they front-run their "reports" with the handful Republicans which were allowed to nibble at the trough.

Meanwhile, SBF is still not in jail and on the contrary even invited to speak: https://twitter.com/andrewrsorkin/status/1595517635441090565

yalogin• 4 years ago

When it comes to doing shady things and not having the backs of regular people there is a lot of unity and bipartisanship in congress.

Congressmembers Tried to Stop the SEC’s Inquiry into FTX

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