Custodia Financial institution CEO slams Washington’s ‘misguided crackdown’ on crypto

The CEO of Custodia Financial institution, Caitlin Lengthy, has slammed regulators and lawmakers in Washington D.C. for his or her “misguided crackdown” on the crypto sector and ignoring her warnings of main “fraud” allegedly performed by now-bankrupted entities.

In a Feb. 17 blog publish titled, Disgrace On Washington, DC For Taking pictures A Messenger Who Warned of Crypto Debacle, Lengthy tore into the federal government for its strategy to crypto regulation, failing to guard traders and alienating good actors within the house:

“Washington’s misguided crackdown will solely push dangers into the shadows, leaving regulators to play whack-a-mole because the dangers constantly pop up in surprising locations.”

Lengthy careworn that together with her digital asset custody agency, she’s “been calling out the worst of crypto whereas making an attempt to construct a lawful, compliant various that relegates scams to the trash heap. However […] most of at the moment’s policymakers appear intent on killing the high-integrity innovators.”

The Custodia Financial institution CEO claimed that her efforts to work with authorities companies have been in the end thrown again in her face as she recounted the spate of negative run-ins her firm has had of late. 

“Custodia was simultaneously attacked by the White House, the Federal Reserve Board of Governors, the Kansas City Fed and Senator Dick Durbin (who conflated our non-leveraged, 100-percent liquid and solvent bank with FTX in a Senate floor speech),” she said, adding that:

“Custodia tried to become federally regulated – the very result bipartisan policymakers claim to want. Yet Custodia has been denied and now disparaged for daring to come through the front door.”

Her sentiments echo that of figures such as Coinbase CEO Brian Armstrong, who has suggested on multiple occasions that agencies like the Securities and Exchange Commission (SEC) have reacted frostily to his agency’s efforts to maintain a dialogue in good religion.

Earlier this month, Armstrong additionally criticized the lack of regulatory clarity within the U.S. and what seems to be a “regulation by enforcement” strategy following the SEC’s transfer to close down Kraken’s staking services on Feb. 9.

“At this time’s regulators and lawmakers in Washington are little question embarrassed that they didn’t cease the criminals of crypto. DC is demanding scalps,” Lengthy wrote within the weblog publish, including that:

“Requires a crackdown at the moment are coming from lots of the similar policymakers who have been charmed by the fraudsters. In a 180-degree flip, they’re now throwing the child out with the bathwater.”

Unheeded warnings

Over on Twitter, Lengthy additionally steered that effectively earlier than the implosion of a number of crypto companies in 2022, she and plenty of others had tried to warn Washington and “assist legislation enforcement cease” main fraud, however to no avail.

Associated: SEC vs. Kraken: A one-off or opening salvo in an assault on crypto?

Lengthy publicly disclosed for the primary time that she had “handed over proof to legislation enforcement of possible crimes” dedicated by an unnamed crypto agency “months earlier than that firm imploded and caught its hundreds of thousands of shoppers with losses.”

Kraken co-founder and CEO Jesse Powell responded to Lengthy’s Twitter thread and corroborated her statements by noting that: “I can’t let you know how infuriating it’s to have identified large pink flags and clearly criminal activity to regulators solely to have them ignore the problems for years.”