Crypto giants are ‘collapsing under the weight of their own fraud’

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

The collapse of FTX in November sparked a contagion that continues to ripple through crypto markets, which remain largely unregulated and opaque.

Warren on Wednesday called on regulators, including the U.S. Securities and Exchange Commission and banking authorities, to double down on the tools they already have. They must protect consumers, educate investors and seek “meaningful consequences” for bad actors, she said.

“Crypto fraud is a big problem, but it’s a problem we can solve,” Warren said.

The SEC over the past two years has made “a good start” in keeping crypto volatility out of the traditional banking system and blocking Bitcoin exchange-traded funds from reaching the market, she said. And without directly naming Bankman-Fried, Warren praised the SEC for charging “crypto-crooks” with defrauding ordinary investors.

“All of our regulators need to step in,” Warren said, calling on environmental and banking officials to step in.

“Crypto-mining companies are polluting communities, they’re straining power grids, and they’re driving up utility costs in communities from Texas to New York,” she said. “The Department of Energy and the Environmental Protection Agency have the power to require crypto miners to disclose their energy usage and environmental impact.”

Warren said the rise of crypto-enabled banks has already opened the traditional banking system to greater risk, “raising the specter of a crypto meltdown in which US taxpayers are left with the bag.”

“It is the job of banking regulators to insulate the banking system – and taxpayers – from the risk of crypto fraud. They have the tools and they must use them.

Finally, Warren said, wherever regulators don’t have the authority they need, it’s up to Congress to give agencies the tools they need to enforce the rules.

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

“No financial industry should write its own playbook – either you comply with the law or face severe consequences if you break it. Crypto is no different.”