Caitlin Long, the CEO of Custodia Bank, has criticized lawmakers and regulators in Washington D.C. for their “misguided assault” on the cryptocurrency industry and for dismissing her warnings of significant “fraud” that was allegedly committed by now-bankrupt firms.
Shame On Washington, DC For Killing A Messenger Who Warned of Crypto Debacle is the subject of a Feb. 17 blog post by Long, who slammed the government for its approach to cryptocurrency regulation, which failed to safeguard investors and alienated good actors in the space. She said,
“Washington’s misguided crackdown will only push risks into the shadows, leaving regulators to play whack-a-mole as the risks continuously pop up in unexpected places.”
Long emphasized that she has “been calling out the worst of cryptocurrency while striving to develop a legitimate, compliant alternative that relegates frauds to the trash heap” via her digital asset custody company. But, the majority of today’s legislators appear determined to put an end to the high-integrity innovators.”
The CEO of Custodia Bank recalled the string of unpleasant encounters her company has recently encountered and stated that her attempts to cooperate with government organizations were ultimately flung back in her face.
She claimed that the White House, the Federal Reserve Board of Governors, the Kansas City Fed, and Senator Dick Durbin all launched simultaneous attacks against Custodia (who conflated the non-leveraged, 100-percent liquid and solvent bank with FTX in a Senate floor speech).
“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.”
She expresses views that are similar to those of individuals like Coinbase CEO Brian Armstrong, who has asserted on numerous occasions that organizations like the Securities and Exchange Commission (SEC) have responded coldly to his company’s attempts to maintain a dialogue in good faith.
Following the SEC’s decision to shut down Kraken’s staking services on February 9, Armstrong also questioned the lack of regulatory clarity in the U.S. and what appears to be a “regulation by enforcement” strategy.
Long wrote in her blog post that lawmakers and regulators in Washington today are probably ashamed of themselves for not putting an end to the cryptocurrency crooks and that Washington is calling for heads to roll. She further stated,
“Calls for a crackdown today are coming from many of the same policymakers who were charmed by the fraudsters. In a 180-degree turn, they’re now throwing the baby out with the bathwater.”
Unheeded Cryptocurrency Warnings
Long also claimed on Twitter that numerous people sought to warn Washington and “assist law enforcement stop” significant fraud before the collapse of several crypto corporations in 2022, but to no effect.
Long revealed in public for the first time that “months before the company crashed and left its millions of clients with losses,” she gave evidence of likely crimes perpetrated by an unnamed cryptocurrency firm to law authorities.
Jesse Powell, co-founder and CEO of Kraken, commented on Long’s Twitter thread and supported her claims by pointing out,
“I can’t tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years.”