Crypto giants “collapsing under the weight of their own fraud,” warns US Senator Elizabeth Warren

US Senator Elizabeth Warren, a longtime cryptocurrency Critics warned that the recent turmoil in the digital asset space will only continue if a multitude of regulators step up protections for investors.

“For all their talk of innovation and financial inclusion, crypto industry giants — from FTX to Celsius to Voyager — are crumbling under the weight of their own fraud, deception and gross mismanagement,” she said.

“And when they go down, they take a lot of honest investors with them,” Warren added during her comments Wednesday at an event hosted by the American Economic Liberties Project and Americans for Financial Reform.

US Senator Elizabeth Warren has urged financial regulators to take tougher action against cryptocurrency companies to protect investors. (AP)

FTX, Celsius and Voyager all filed for bankruptcy over the past year as asset prices plummeted and the global crypto market cap plummeted by around $2 trillion ($2.8 trillion).

US federal prosecutors have charged several former FTX executives, including founder Sam Bankman-Fried, with orchestrating one of the largest financial frauds in US history.

FTX’s collapse in November sparked contagion that is still spreading to crypto markets, which remain largely unregulated and opaque.

Warren on Wednesday urged regulators, including the US Securities and Exchange Commission and banking authorities, to double down on the tools already in place. They must protect consumers, educate investors and pursue “meaningful consequences” for bad actors, she said.

“Crypto fraud is a big problem, but one we can fix,” Warren said.

The SEC has made “a good start” over the past two years by keeping crypto volatility out of the traditional banking system and preventing bitcoin exchange-traded funds from entering the market, she said. And without naming Bankman-Fried directly, Warren credited the SEC for accusing “crypto crooks” of defrauding ordinary investors.

FTX founder Sam Bankman-Fried faces eight criminal charges of fraud, conspiracy and money laundering, including illegal political donations. (Getty)

But the SEC can’t fix everything.

“All of our regulators have to come into play,” Warren said, urging environmental and banking officials to get involved.

“Crypto mining companies are polluting communities, taxing power grids and driving up operational costs in communities from Texas to New York,” she said. “Both the Department of Energy and the Environmental Protection Agency have the authority to require crypto miners to disclose their energy use and environmental impact.”

Warren said the rise of crypto-friendly banks has already put the traditional banking system at greater risk and “raised the specter of a crypto meltdown, with American taxpayers holding the bag.”

“It is the job of banking regulators to protect the banking system – and taxpayers – from the risk of crypto fraud. You have the tools and you have to use them.

Finally, Warren said, it is Congress’s responsibility to give agencies the tools they need to enforce the rules when regulators lack the requisite authority.

US Senator Elizabeth Warren has urged the Securities and Exchange Commission to redouble the fight against crypto criminals. (AP)

In her typical matter-of-fact tone, she paid tribute to crypto advocates who have long resisted the idea of ​​more regulation.

Tougher regulators, she said, would give the industry a chance “to prove it can deliver on its innovation promises without robbing investors or laundering funds for drug traffickers and terrorists.”

“No financial industry should be able to write its own playbook – either obey the law or face harsh consequences if you break it. Crypto is no different.”

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