UNITED STATES NEWS

Regulators and law enforcement crack down on crypto’s bad actors. Congress has yet to take action

Nov 22, 2023, 8:00 PM | Updated: 8:56 pm

Binance founder and CEO Changpeng Zhao, right, leaves federal court in Seattle, Tuesday, Nov. 21, 2...

Binance founder and CEO Changpeng Zhao, right, leaves federal court in Seattle, Tuesday, Nov. 21, 2023, after pleading guilty to violations of U.S. anti-money laundering laws. (Ken Lambert/The Seattle Times via AP)

(Ken Lambert/The Seattle Times via AP)

WASHINGTON (AP) — While the scandals in the cryptocurrency industry seem to never end, Washington policymakers appear to have little interest in pushing through legislation to codify the structure of the industry.

The latest shoe to drop is Binance’s multibillion dollar settlement with U.S. authorities and the resignation of its CEO this week. Before that came the conviction of FTX founder Sam Bankman-Fried for stealing billions from customers and the implosion of smaller crypto companies that cost investors large sums of money.

When cryptocurrencies collapsed and a number of companies failed last year, Congress considered multiple approaches for how to regulate the industry in the future. However, most of those efforts have gone nowhere, especially in this chaotic year that has been dominated by geopolitical tensions, inflation and the upcoming 2024 election.

In fact, the appetite for new rules seems more diminished than ever.

U.S. Treasury Secretary Janet Yellen said plainly Tuesday that there is no need for new cryptocurrency rules at a news conference announcing the $4 billion settlement with Binance: “I think today’s actions show that we are serious about enforcing strong regulations that are already in place to make sure that illegal transactions are not fostered by cryptocurrency entities,” she said.

And a group of more than 100 mostly Democrat lawmakers in October said the responsibility for preventing the use of crypto to finance terrorism belongs to the White House, calling for the Biden Administration to act.

Changpeng Zhao, the CEO of Binance, pleaded guilty Wednesday to a felony related to his failure to prevent money laundering on the platform. Zhao stepped down and Binance admitted to violations of the Bank Secrecy Act and apparent violations of sanctions programs, including its failure to implement reporting programs for suspicious transactions.

As part of the settlement agreement, the U.S. Treasury said Binance will be subject to five years of monitoring and “significant compliance undertakings, including to ensure Binance’s complete exit from the United States.” Binance is a Cayman Islands limited liability company.

U.S. Attorney General Merrick Garland called the settlement one of the largest corporate penalties in the nation’s history.

Now the largest entities in crypto over the past couple of years — Binance, Coinbase and FTX — are either in severe legal trouble, under investigation or have collapsed altogether.

Without Congress, federal regulators like the Securities and Exchange Commission have stepped in to take their own enforcement actions against the industry, including the filing of lawsuits against Coinbase and Binance and Kraken, three of the biggest cryptocurrency exchanges. Kraken was charged by the SEC this week with operating its crypto trading platform as an unregistered securities exchange.

Additionally, PayPal received a subpoena from the SEC related to its PayPal USD stablecoin, the company said in a filing with securities regulators this month. The firm says its cooperating with authorities.

Some members of Congress have opposed the SEC’s actions on crypto, arguing that the SEC needs congressional approval to justify going after bad actors, or that crypto should be regulated more like a commodity, which would be under the jurisdiction of the Commodity Futures Trading Commission. One or both of those arguments have been made by legislatures in both political parties.

Sens. Debbie Stabenow, D-Mich., and John Boozman, R-Ark., proposed last year to hand over the regulatory authority over cryptocurrencies such as bitcoin and ether to the CFTC. Stabenow and Boozman lead the Senate Agriculture Committee, which has authority over that regulator.

So while Congress has made proposals it has yet to act. Part of the reluctance to act stems from lawmakers’ inability to coalesce around what crypto is in the first place, and further, the opposition from some powerful members of Congress to crypto altogether.

One of those members opposed is Sen. Sherrod Brown, D-Ohio, chair of the Senate Banking Committee.

Brown has been highly skeptical of cryptocurrencies as a concept and he’s been generally reluctant to put Congress’ blessing on them through legislation. He’s held several committee hearings over cryptocurrency issues, ranging from the negative impact on consumers to use of the currencies to fund illicit activities, but has not advanced any legislation out of his committee.

“Americans continue to lose money every day in crypto scams and frauds,” Brown said in a statement after Bankman-Fried was convicted. “We need to crack down on abuses and can’t let the crypto industry write its own rulebook.”

In the House, a bill that would put regulatory guardrails around stablecoins — cryptocurrencies that are supposed to be backed by hard assets like the U.S. dollar — passed out of the House Financial Services Committee this summer. But that bill has gotten zero interest from the White House and the Senate.

Consumer advocates are skeptical about the need for new rules, or the usefulness of crypto itself.

“The lawlessness if not criminal activities of crypto will continue and increase until all prosecutors, regulators and elected officials force the industry to act like all other law-abiding people and firms in the financial industry,” said Dennis Kelleher, president of Better Markets, a nonprofit that works to “build a more secure financial system for all Americans,” according to its website.

Whereas some analysts say the fraud trials, settlements and criminal charges signal a new era for crypto development.

Yiannis Giokas, senior director of digital assets at Moody’s Analytics said the settlement agreement between U.S. Authorities and Binance “marks the end of an era.”

“With digital currencies becoming more mainstream and institutional players entering the space, regulations and enforcement will become stricter to ensure compliance and consumer protection. Yesterday’s development marks the same inflection point that we saw earlier at the intersection of the .com and post-.com eras.”

United States News

Associated Press

Texas police arrest suspect in abduction of 12-year-old girl who was found safe after 8 days

COLUMBUS, Texas (AP) — Police in Texas have arrested a man suspected in the disappearance of a girl who was missing for eight days before she was safely located. The 27-year-old Houston man was charged with evading authorities after he attempted to flee from officers on Friday, the Columbus Police Department said in social media […]

33 minutes ago

FILE - A voting sign is seen near a voting center at Croft Baptist Church, Feb. 24, 2024, in Sparta...

Associated Press

A chunk of Republican primary and caucus voters say they wouldn’t vote for Trump as the GOP nominee

WASHINGTON (AP) — A small but substantial chunk of Republican primary and caucus voters say they would be so dissatisfied if Donald Trump became the party’s presidential nominee that they would not vote for him in November’s general election, according to AP VoteCast. An analysis of the data shows that many of those voters were […]

38 minutes ago

Prison psychological specialist Christine Ransom, right, leads a group session for inmates, Dec. 14...

Associated Press

Prisoners with developmental disabilities face unique challenges. One facility is offering solutions

ALBION, Pa. (AP) — “You are the Lighthouse in someone’s storm,” reads the message above a mural of a sailboat bobbing on ocean waves under a cloud-studded azure sky. It’s an unexpected slogan for a prison wall. On a nearby door painted deep blue, a bright yellow Minion character offers “Ways to say hello,” lists […]

2 hours ago

FILE - Democratic presidential hopeful, Sen. Barack Obama D-Ill., celebrates with his supporters af...

Associated Press

Iowa Democrats were forced to toss the caucus. They’ll quietly pick a 2024 nominee by mail instead

DES MOINES, Iowa (AP) — There’s a lot less fanfare for Democrats in Iowa picking their presidential nominee this year, and it’s not only because Democratic incumbent Joe Biden is in the White House. Instead of congregating for caucuses, a one-night spectacle where community members publicly signal their support for a candidate, Iowa Democrats headed […]

7 hours ago

Kylie Moreland, the Monroe County Elections Supervisor poses in her office in Bloomington, Ind., Tu...

Associated Press

An Indiana county hires yet another election supervisor, hoping she’ll stay

BLOOMINGTON, Ind. (AP) — An Indiana county lost its top election official nearly every other month over the last year after a longtime supervisor resigned following a counting error in the November 2022 tally. Voting advocates hope fears of a rocky election year will ease now that Monroe County has named a supervisor who is […]

7 hours ago

Christiane Keyhani, program coordinator of Hui O Ka Wai Ola, fills up the bucket to test water qual...

Associated Press

In Hawaii, coral is the foundation of life. What happened to it after the Lahaina wildfire?

Abraham “Snake” Ah Hee rides waves when the surf’s up and dives for octopus and shells when the water is calm. The lifelong Lahaina, Hawaii, resident spends so much time in the ocean that his wife jokes he needs to wet his gills. But these days Ah Hee is worried the water fronting his Maui […]

7 hours ago

Sponsored Articles

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

Regulators and law enforcement crack down on crypto’s bad actors. Congress has yet to take action