Blockchain News

Custodia Bank CEO slams Washington’s ‘misguided crackdown’ on crypto

Caitlin Long said that she had notified government officials months before numerous firms went bankrupt about substantial “fraud” in the crypto industry.

Caitlin Long, CEO of Custodia Bank, has lambasted Washington D.C. regulators and lawmakers for their “misguided attack” on the crypto industry and for dismissing her warnings of massive “fraud” allegedly perpetrated by now-bankrupt firms.

Long ripped against the government for its approach to crypto regulation, failing to protect investors and alienating decent actors in the industry, in a February 17 blog post headlined “Shame On Washington, DC For Killing A Messenger Who Warned of Crypto Debacle”:

“Washington’s misguided enforcement will merely push hazards into the shadows, leaving regulators to play whack-a-mole as dangers continue to sprout up in unexpected areas,” says the report.

Long emphasized that her digital asset custody firm has “been calling out the worst of crypto while striving to establish a lawful, compliant alternative that relegates frauds to the trash bin,” but “most of today’s policymakers appear intent on murdering the high-integrity entrepreneurs.”

As she recalled a string of unpleasant run-ins with government authorities, the Custodia Bank CEO stated that her efforts to collaborate with them were ultimately thrown back in her face.

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

“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 opinions are similar to those of Coinbase CEO Brian Armstrong, who has repeatedly stated that agencies such as the Securities and Exchange Commission (SEC) have reacted harshly to his company’s efforts to maintain a good faith discussion.

Following the SEC’s decision to shut down Kraken’s staking services on February 9, Armstrong further questioned the lack of regulatory clarity in the United States and what looks to be a “regulation by enforcement” strategy.

“Today’s regulators and lawmakers in Washington are no doubt ashamed of their failure to stop cybercriminals. “D.C. wants scalps,” Long stated in a blog post, adding:

“Calls for a crackdown today are coming from many of the same policymakers who the con artists duped. Unfortunately, they’ve done a complete 180-degree turn and are now throwing the baby out with the bathwater.”

Long also claimed on Twitter that long before the collapse of multiple crypto corporations in 2022, she and others sought to warn Washington and “assist law enforcement halt” big fraud, but to no effect.

Long said she was publicly announcing for the first time that she had “given over information to law enforcement of potential crimes” done by an unnamed crypto firm “months before that company crashed and left millions of clients with losses.”

Jesse Powell, co-founder and CEO of Kraken, responded to Long’s Twitter thread by saying, “I can’t tell you how annoying it is to have pointed up major red flags and blatantly unlawful activities to authorities just to have them disregard the issues for years.”

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