Jesse Powell blasts watchdogs over alleged regulatory strategies

Jesse Powell blasts watchdogs over alleged regulatory strategies

It's only been a few days since Kraken, one of the largest exchanges in the US, suspended its staking services and paid a $30 million settlement for selling what the SEC said were unlicensed securities.

Despite compliance with regulators and commitment to proof of reserves, both Kraken and Binance have been under fire recently, albeit for different reasons.

Two birds, one stone

According to former Kraken CEO Jesse Powell, regulators may be allowing bad actors to carry out their schemes to try to paint cryptocurrencies in a bad light and shut down real exchanges that often succumb to wars of attrition with dishonest firms that essentially print their own resources whenever necessary.

Once the good guys give up, the SEC and other regulators can take action against the bad actors who were supposedly allowed to carry on without interference until their competition was crushed.

I have a theory: The regulators let the bad guys grow big and blow up because it serves their agenda.

1. Destroy capital/resources in the crypto ecosystem

2. Burn people, prevent adoption

3. Provide air cover to attack good actors. The bad guys are actually on the side. Good guys are the enemy.

No good deed goes unpunished

Powell's vent is likely the result of previous events, as both he and Caitlin Long reportedly warned regulators about certain fishy trades in the crypto industry.

Although none of the crypto heavyweights specified which case they were talking about, someone with this level of knowledge of the industry would likely have one or more of the recent examples to choose from.

In the case of Caitlin Long – the founder and CEO of Custodia Bank – Proof of all probable crimes were turned over to LEOs without any action being taken.

“I am publicly announcing for the first time that (a) I have turned over to law enforcement evidence of probable crimes committed by a major crypto fraud beginning months before that company imploded, burdening its millions of customers with losses, and I warned bank regulators of the increasing bank run risk within banks that serve the crypto industry, b4 that bank runs ultimately affect.”

Long is now pushing for a bipartisan bill that would regulate the crypto industry in the same way that mutual funds were properly supervised in the 1940s.

While cases like this are understandably frustrating for those who alerted regulators in advance, it's worth noting that details of legal investigations are often unsealed years, if not decades, later. As a result, it is possible that both Long and Powell's advice were followed by regulators who are simply keeping it under wraps for now.

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