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

February 18, 2023No Comments


Custodia Bank CEO Caitlin Long criticized regulators and lawmakers in Washington DC for their "misguided crackdown" on the crypto sector and ignoring their warnings of major "fraud" allegedly carried out by now-bankrupt entities.

On a February 17 Blog Posting titled Shame on Washington, DC for Shooting a Courier Who Warned of Crypto Meltdown, Long criticized the government for its approach to crypto regulation, failing to protect investors and alienating good players in the space:

“Washington’s misguided crackdown will only push risks into the shadows, leaving regulators to play hit-a-mole as risks continually pop up in unexpected places.”

Long emphasized that with his digital asset custody firm, “he has been exposing the worst of cryptocurrencies while trying to build a legal and compliant alternative that consigns scams to the dustbin. But [...] most legislators today seem intent on killing high-integrity innovators.”

The chief executive of Custodia Bank said her efforts to work with government agencies were ultimately thrown at her when she recounted the series of negative encounters your firm has had lately.

“Custodia was simultaneously attacked by the White House, the Federal Reserve Board of Governors, the Kansas City Federal Reserve and Senator Dick Durbin (who conflated our 100% liquid and solvent unleveraged bank with FTX in a Senate speech )”, she said, adding that:

“Custody tried to be regulated by the federal government, the same result that bipartisan politicians claim to want. Yet Custody has been denied and now belittled for daring to walk through the front door."

His sentiments are echoed by figures like Coinbase CEO Brian Armstrong, who has suggested on multiple occasions that agencies like the Securities and Exchange Commission (SEC) they have reacted coldly to the efforts of your company maintain a dialogue in good faith.

Earlier this month, Armstrong also criticized the lack of regulatory clarity in the US and what appears to be a "rule by enforcement" approach following the SEC's decision to shut down Kraken Staking Services on February 9.

“Today's regulators and legislators in Washington are no doubt embarrassed that they failed to stop cryptocurrency criminals. DC is demanding scalps,” Long wrote in the blog post, adding that:

“Calls to crack down today are coming from many of the same policymakers who were charmed by the scammers. In a 180 degree turn, they are now flushing the baby out with the bathwater."

neglected warnings

On Twitter, Long also suggested that long before the implosion of several crypto companies in 2022, she and many others had tried to warn Washington and “help law enforcement stop” major fraud, but to no avail.

Related: SEC vs. Kraken: A Single or Opening Salvo in an Assault on Crypto?

Long publicly revealed for the first time that he had "provided evidence to law enforcement of probable crimes" committed by an unidentified crypto company "months before the company imploded and caused losses to its millions of customers."

Kraken co-founder and CEO Jesse Powell responded to Long's Twitter thread and corroborated his remarks, noting: "I can't tell you how infuriating it is to have flagged massive red flags and obviously illegal activity to regulators only to have them ignore them." problems for years.