- The CEO of cryptocurrency bank Custodia, Caitlin Long, has condemned the American government’s handling of crypto fraud.
- She expressed her sentiments in a blog post after providing law enforcement examples with evidence.
- Long’s post came after the Federal Reserve Board rejected Custodia’s application to join the Federal Reserve System.
The CEO of Custodia, Caitlin Long, said in a blog post on February 17 that she had provided authorities with information about a crypto fraud case months before the company collapsed, which had resulted in losses for millions of the firm’s customers.
In her blog post headlined “Shame on Washington, DC for Killing a Messenger Who Warned of Crypto Debacle,” Long claims that the present enforcement measures are a ‘misguided crackdown’ on the entire industry.
Long wrote:
“Calls for a crackdown today are coming from many of the same policymakers charmed by the fraudsters.
The Custodia CEO added:
“In a 180-degree turn, [policymakers are] now throwing the baby out with the bathwater.”
The banking executive also stated that government officials ambushed the cryptocurrency industry by comparing the operations of her crypto bank to FTX’s misconduct and demise.
Long stressed:
“Custodia Bank recently found itself in the crosshairs of Beltway Politics at their worst. The White House simultaneously attacked Custodia, 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, in which he attacked two companies run by female CEOs, Fidelity and Custodia —implicitly comparing us to a 29-year-old accused fraudster who is now wearing an ankle bracelet).”
Custodia’s Unsuccessful Application to Become a Member of the Federal Reserve System
Custodia Bank’s application to become federally regulated was shot down. Long wrote:
“Custodia tried to become federally regulated—the result that bipartisan policymakers claim to want. Yet Custodia has been denied and is now disparaged for daring to enter the front door.”
Her opinions align with those of other famous figures in the cryptocurrency space, like Coinbase CEO Brian Armstrong, who has asserted numerous times that organizations like the Securities and Exchange Commission (SEC) have responded coldly to his company’s attempts to maintain a dialogue in good faith.
Jesse Powell, CEO of Kraken, responded to Long’s Twitter thread after she wrote a blog post on the issue. Powell tweeted:
“I can’t tell you how infuriating it is to have pointed out massive red flags and illegal activity to regulators only to have them ignore the issues for years. They’re offshore. “It’s complicated.” We’re looking at everybody.” For years, to be used as an example.”
The claims from Long, Powell, and Armstrong follow the enforcement of the SEC against CEO Don Kwon nine months after the collapse of the Terra ecosystem. Powell’s cryptocurrency exchange is one of the most recent victims of the regulatory crackdown on cryptocurrencies. Earlier this month, Kraken agreed with the SEC on a $30 million settlement after the regulator accused the crypto exchange of offering its staking program as a security.
