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US Government Wants to ‘Send a Message’ to Crypto With SBF’s Arrest, Says Former US Prosecutor
Renato Mariotti, now a partner at international law firm Bryan Cave Leighton Paisner, discusses why regulators are “eager to plant a flag” on the crypto industry.
Updated Dec 15, 2022, 7:46 p.m. Published Dec 15, 2022, 7:46 p.m.
The arrest of former FTX CEO Sam Bankman-Fried (SBF) has provided U.S. government regulators with a way to “send a message” to the crypto industry, said a former prosecutor for the U.S. Justice Department’s Securities and Commodities Fraud unit.
Renato Mariotti told CoinDesk TV’s “First Mover” that Bankman-Fried’s media tour after the crypto exchange's failure may have contributed to his downfall, according to Mariotti. SBF was arrested in the Bahamas on Monday after the U.S. charged him with, among other things, wire fraud, conspiracy to commit money laundering and campaign finance violations.
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“From the DOJ’s perspective, SBF was spreading misinformation and was creating a lack of confidence in the regulators to police the market,” he said about Bankman-Fried’s string of media appearances.
Read more: FTX Founder Sam Bankman-Fried Formally Charged With Conspiracy, Fraud in US Court
Mariotti, who is now a partner at international law firm Bryan Cave Leighton Paisner, added there was “speculation that regulators were going to let him off” without facing prosecution, in part because of his political ties to lawmakers. SBF had donated upwards of $40 million to various political campaigns, including $5.2 million to Joe Biden’s successful U.S. presidential campaign in 2020.
But with the collapse of FTX, Bankman-Fried, who faces eight criminal charges, has “definitely” soured crypto’s reputation. Now, “there’s definitely an energy in federal law enforcement right now in going after crypto,” Mariotti said.
Mariotti said it is likely Bankman-Fried will be used as an example for why the digital asset industry needs more oversight. He said it is unlikely there will be any crypto-friendly regulation in the immediate future. Instead, he said, the industry may find itself facing “a lot of enforcement actions” in the short term, particularly from the Securities and Exchange Commission (SEC).
“The [Biden] administration believes that the digital asset space is unregulated and thinks that [crypto firms] can get away with anything,” Mariotti said. That is why federal regulators are “eager to plant a flag and send a message.”
Read more: FTX Founder Sam Bankman-Fried Arrested in the Bahamas
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Fintech and Crypto Firms Seek Bank Charters Under Trump Administration: Reuters
Financial technology and crypto firms are increasingly applying for state or national bank charters, despite the community’s historical resistance to centralized banking.
Wat u moet weten:
- Fintech and crypto firms are increasingly applying for bank charters, anticipating a more favorable regulatory landscape.
- Becoming a bank allows firms to accept deposits and lower borrowing costs but brings stricter oversight.
- Regulatory bodies have historically approved few new bank charters, though recent signals suggest a more streamlined process.
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