Cryptocurrency fraud cases are common, and some of the most vocal and well-known leaders in the field have faced serious legal troubles in recent years.
you know the name:
- Sam Bankman Freed sentenced to 25 years in prison
- Zhao Changpeng released after 4 months
- Nader al-Nazi arrested and faces up to 20 years in prison (if convicted)
- Arthur Hayes, 6 months home confinement
- Suspect Do Kwon arrested, possible serious prison sentence
- Mark Karpeles arrested in Japan over Mt.Gox legal troubles
- Alex Mashinsky arrested in 2023 and currently on trial
- Charlie Shrem pleads guilty in 2015 and serves one year in prison
Crypto.news gathered comments on whether the crypto industry has a serious leadership problem or is simply plagued by some bad issues. At first glance, it seems like a fertile ground for shady happenings.
But then again, “Is it any worse than anything else out there?” asks Anthony Scaramucci, founder of SkyBridge Capital.
“You could say there are bad apples in other areas of finance as well,” Scaramucci told us via Saxo. “I would argue that it's no worse than anything else. We're in the process of solving this problem.”
Biden was 'overly aggressive'
Scaramucci's hedge fund has accepted Bitcoin (BTC) as a commodity. In 2020, he spent seven years at Goldman Sachs, where he has had a prolific career in finance.
He previously served as White House communications director for 11 days under former President Donald Trump.
Mr. Scaramucci has since worsened his attitude toward Mr. Trump, endorsing Vice President Kamala Harris in the 2024 presidential election. He even said at the TOKEN2049 conference in Singapore that he is working with Harris' campaign to develop more industry-friendly policies in case she wins on Election Day, November 5. revealed.
For crypto investors, that's exactly what they're looking for: inside talent who knows the industry and can make inroads in Washington, D.C. So far, their big frustration is with the Biden administration and within the U.S. stock exchanges. Commission (SEC) in the current leadership.
In 2023, Biden-appointed SEC Chairman Gary Gensler filed 46 crypto-related enforcement actions. That's a 53% increase from 2022, according to Cornerstone Research.
Lawmakers were likely “embarrassed” by FTX founder Bankman Fried, Scaramucci added. Bankman Freed was convicted of embezzling an estimated $10 billion in customer deposits (Scaramucci's Skybridge suffered when FTX collapsed).
Since then, the SEC has become even stricter. Mr. Gensler has taken action against major companies such as Binance, Coinbase, Ripple, and Terraform Labs. This has led to numerous legal battles and high-profile lawsuits.
Most cryptocurrency tokens qualify as securities under U.S. law and, as a result, come under the supervision of the SEC.
“I think they [the Biden administration] It was overly aggressive in terms of its anti-crypto stance,” Scaramucci said. “There was no need to be so aggressive.”
Other crypto experts share similar opinions. Tim Kravtunovski, founder and CEO of decentralized telecommunications company Chirp, argues that these enforcement actions by the SEC felt more like an attack than constructive oversight. .
“Crypto investors have faced confusion, inconsistent policies, and sometimes outright hostility,” Kravtunovsky said of the past four years. “Instead of fostering innovation or providing clarity, [Biden] The administration's actions have caused anxiety and left investors speculating about the sector's future. ”
Trump does a 180 degree
Crypto's public relations nightmare continued last week, with US prosecutors indicting 15 people from four companies: Gotbit, ZM Quant, CLS Global, and MyTrade.
According to the FBI, these companies engaged in fraudulent activities aimed at manipulating the market.
However, Kravtunovsky argues that such a scenario “does not represent the whole story of cryptocurrencies.”
“This industry doesn't have a leadership problem, it has a trust problem,” he says. “Every time someone like Sam Bankman Freed makes headlines for fraud, the media paints the entire industry with the same brush. But wherever money flows, so do opportunists and criminals. Remember, this is not unique to cryptocurrencies.”
In fact, crime permeates every corner of finance. In 2023, more than $3 trillion in illicit funds reportedly flowed through the global financial system. This trend is largely driven by the rise of digital technology, which provides criminals with new avenues, and is expected to continue.
“It is disappointing to see the growing list of arrests and indictments of high-profile crypto leaders,” said David Morrison, senior market analyst at Trade Nation. “There are clearly bad actors who deceive and defraud customers or intentionally break regulations for their own benefit. But this is not uncommon in situations where new technology and money collide.”
It looks bad, but Prime Minister Scott Morrison hopes things will improve “as regulations continue to evolve in a way that works for the industry as a whole.”
“This requires regulators and policymakers to have a genuine interest in and understanding of cryptocurrencies, welcoming their potential and assessing their importance,” he said.
It's no wonder the industry is looking to Trump's possible re-election as a sign of hope. The 78-year-old candidate saw an opportunity to appeal to a passionate segment of voters who had grown dissatisfied with the Biden administration. Gemini co-founders Tyler and Cameron Winklevoss are two of his biggest donors.
once a cryptocurrency skepticalTrump, who has been impeached twice, is now one of the industry's most ardent cheerleaders. He is also preparing to sell his tokens to the public starting Tuesday, October 15th, under the banner of World Liberty Financial, the company he founded with his three sons.
Polymarket, a platform that allows users to gamble on real-world events using cryptocurrencies, currently has him leading Harris by more than 8 percentage points in its 2024 presidential predictions.
But in an industry marred by illegal activity, is Trump, the first former US president to be convicted of a felony, the best bet for cryptocurrencies? Even the most ardent supporters of the Republican Party have bad feelings about World Liberty Financial.
“Whether you like Trump or not, his World Liberty Financial business shows that he does not shy away from cryptocurrencies,” Kravtunovsky said. “Say what you want about the hype, but at least he's not trying to crush the industry with endless regulation.”
Advice to Harris
One area where Harris, 59, diverges from Biden is in cryptocurrencies. Last month, at an event in Manhattan, the Democratic candidate said he wanted to embrace “transformative technologies” such as digital assets while protecting consumers and investors.
Billionaires Mark Cuban and Ben Horowitz are also participating. So did Ripple co-founder Chris Larsen, who recorded his first crypto donation to a Ripple campaign.
Should Harris win the election, Morrison offered some advice on behalf of his crypto fraternity. “Even if Harris wins next month, don’t relegate cryptocurrencies to the ‘can’t be bothered’ category.”
He added that cryptocurrencies have the potential to help the unbanked and “promote entrepreneurship in some of the poorest and most neglected regions on Earth.” “Don't ignore it just because Donald Trump talks about it often.”
Kravtunovsky agrees.
“If Ms. Harris takes office, she needs to understand that cryptocurrencies are not just speculative, but a revolutionary technology that has the potential to redefine the industry,” he said. “But importantly, she has to listen to people who actually understand blockchain, not just hype artists and bureaucrats who think in terms of control. This will shut it down. It's about creating a healthy environment for people to thrive responsibly. America can't let fear and misinformation drive its policies.”
Scaramucci, a former Trump adviser turned Harris adviser, doesn't seem too worried about this fast-growing asset class.
“The best days for cryptocurrencies are yet to come,” he says.
