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posted by janrinok on Friday February 17 2023, @06:59PM   Printer-friendly

Senators Are Hopping Mad and Demanding Answers for the Crypto Collapse:

Lawmakers from opposing parties disagreed over who and what was truly to blame for a devastating crypto crash that left customers collectively burnout out of billions in losses during a Wednesday Senate Banking Committee hearing. While Democratic lawmakers and crypto skeptics warned of the dangers presented by a lack of meaningful oversight measures, Republicans pushed back, with some blaming part of the recent tumultuous chaos on the Securities and Exchange Commission's alleged failure to use regulatory powers already at its disposal.

[...] The lawmakers questioned three expert witnesses who held widely divergent views on cryptocurrency. Linda Jeng, the chief global regulatory officer and general counsel for major crypto advocacy group Crypto Council for Innovation, largely went to bat for the industry, while Duke Financial Economics Center Policy Director Lee Reiners and Vanderbilt University Law School Professor Yesha Yadav have spoken more critically about crypto companies.

In her testimony, Jeng, who testified under her personal capacity as an academic and researcher, tried to separate the broader crypto space from specific bad actors like FTX's Sam Bankman-Fried, and called for a light-handed, nuanced regulatory approach. Jeng said it was important for crypto firms to have clear rules of the road dictating what they can and can't do, but cautioned against overly aggressive restrictions. In addition to rules, Jeng said it was important for the U.S. to adopt a more coherent national strategy around crypto to avoid falling too far behind the E.U., U.K, and others.

"This is a key moment for our transition to a digital economy," Jeng said in her written testimony. "We are at a decision point where how we build our legal and regulatory foundation will determine our digital future for decades to come.

Reiners was far less measured. The professor said he believed crypto was "doing more harm than good to our society," and questioned some lawmakers' interest in embracing a technology, "that is undermining our sovereignty." Not mincing words, Reiners said regulators should do everything in their power to prevent crypto from seeping its way into the traditional banking sector.

"Crypto is just gambling," Reiners said, before comparing crypto to Powerball tickets.

Citing the recent FTX collapse as an example, Reiners said lawmakers and regulators should force platforms to separate customer and firm assets to prevent shady companies from investing customer funds in other areas.

Ignore, if you can, the partisan arguments. What do you think is the future of cyptocurrencies and what policies should we be adopting to help shape that future?


Original Submission

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SBF Asks for 5-Year Prison Sentence, Calls 100-Year Recommendation “Grotesque” 20 comments

https://arstechnica.com/tech-policy/2024/02/sbf-asks-for-5-year-prison-sentence-calls-100-year-recommendation-grotesque/

Convicted FTX fraudster Sam Bankman-Fried pleaded for a lenient prison sentence in a court filing yesterday, saying that he isn't motivated by greed and "is already being punished."

Bankman-Fried requested a sentence of 63 to 78 months, or 5.25 to 6.5 years. Because of "Sam's charitable works and demonstrated commitment to others, a sentence that returns Sam promptly to a productive role in society would be sufficient, but not greater than necessary, to comply with the purposes of sentencing," the court filing said.

[...] The filing urged the court to "reject the PSR's barbaric proposal" of 100 years, saying that such sentences should only be for "heinous conduct" like terrorism and child sexual abuse.

The founder and ex-CEO of cryptocurrency exchange FTX, Bankman-Fried was convicted on seven charges with a combined maximum sentence of 110 years after a monthlong trial in US District Court for the Southern District of New York. The charges included wire fraud and conspiracy to commit wire fraud, securities fraud, commodities fraud, and money laundering.

[...] Kaplan said before the trial that SBF "could be looking at a very long sentence" if convicted. After the conviction, law professors were quoted as saying that Bankman-Fried's sentence was likely to be at least 20 or 25 years and conceivably as much as 50 years.

[...] "Sam was not predatory. He did not set out to prey on the elderly, the unsophisticated, or implement a plan to poach pension assets. His conduct falls far lower on the culpability scale," the filing said. He also "never intended to cause loss for the purpose of his own personal gain," his legal team said.

Bankman-Fried's conduct should be characterized as "risk shifting," the filing said. Risk-shifting "offenses are not specifically intended to cause loss. Instead, they shift the risk of any potential loss from the defendant (or from others involved in the criminal undertaking) to a third party, such as the victim of the offense."

According to Bankman-Fried's legal team, this makes his offenses similar in severity to "false statements for the purpose of obtaining a bank loan that is intended to be repaid. Such offenses are generally less culpable than those where loss is specifically intended."

[...] Bankman-Fried's sentencing submission was accompanied by letters of support from his parents and others. His mother, Barbara Fried, wrote that "Sam is the first person we would call if we needed an angel of mercy in a pinch," and that he "lived an exemplary life in every way prior to the events that brought FTX down."

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  • (Score: 0) by Anonymous Coward on Friday February 17 2023, @08:08PM

    by Anonymous Coward on Friday February 17 2023, @08:08PM (#1292260)

    Prepare the firmly worded letter!

    Republicans pushed back, with some blaming part of the recent tumultuous chaos on the Securities and Exchange Commission's alleged failure to use regulatory powers already at its disposal.

    Republicans got it right this time. You can't use your powers against the people that finance the lobbying and campaigns, and those SEC people will need a job after they retire from the SEC. Treachery is everywhere

  • (Score: 5, Insightful) by krishnoid on Friday February 17 2023, @08:14PM (7 children)

    by krishnoid (1156) on Friday February 17 2023, @08:14PM (#1292264)

    Ignore, if you can, the partisan arguments. What do you think is the future of cyptocurrencies and what policies should we be adopting to help shape that future?

    If the senators are hopping mad because their friends and family and investment advisors and campaign donors customers lost lots of money, well, I guess the great bird of the galaxy free market is coming home to roost because a lot of senators people didn't understand the historical impetus behind our delightfully tortuous financial regulatory system.

    And maybe why you can lose money investing in "financial instruments" rather than, say, a melon. I mean, isn't cryptocurrency basically lines on a cryptographically signed double-entry ledger? And if you want to go to crypto-Staples and buy another ledger and put a picture of a cute dog on it, you can? Doesn't even sell advertising space? "Value" that for me.

    • (Score: 2) by JoeMerchant on Friday February 17 2023, @08:52PM (5 children)

      by JoeMerchant (3937) on Friday February 17 2023, @08:52PM (#1292274)

      I wouldn't exactly call it a double entry ledger, but I guess that's better than a "series of tubes..."

      I believe the Crypto collapse is most easily explained as: "Vapor in, vapor out." Any temporary value assigned to these ephemeral concepts is solely at the discretion of the "collectors" of said items.

      Vaguely related: "The Pez Outlaw" is a fun example of a guy with a fun story who wrote it up in a blog and sold it to Netflix for production as a Comed-umentary. In his story, he tapped into a market of "collectors" who were willing to pay $25 a pop, all day long, for "unique" Pez dispensers. I won't spoil it anymore than to say, it looked like a fun ride and: he got his bubble burst before he made too much money.

      Crypto attracts bigger pools of fools, but (in 99.9%+ of what is sold as "investments" in crypto) it has even less underlying value than Pez dispensers.

      --
      🌻🌻 [google.com]
      • (Score: 0) by Anonymous Coward on Saturday February 18 2023, @10:29AM (2 children)

        by Anonymous Coward on Saturday February 18 2023, @10:29AM (#1292352)

        BitCoin. Tulips.

        Invest in yourself.

        Anything else can and will be taken from you.

        • (Score: 0) by Anonymous Coward on Saturday February 18 2023, @10:33AM

          by Anonymous Coward on Saturday February 18 2023, @10:33AM (#1292354)

          He who has the gun will soon have the gun and the gold.

        • (Score: 2) by JoeMerchant on Saturday February 18 2023, @09:20PM

          by JoeMerchant (3937) on Saturday February 18 2023, @09:20PM (#1292449)

          >Invest in yourself.

          For any who haven't read it yet: http://mangocats.com/ao/IslandLife.html [mangocats.com]

          --
          🌻🌻 [google.com]
      • (Score: 2) by mcgrew on Saturday February 18 2023, @09:06PM (1 child)

        by mcgrew (701) <publish@mcgrewbooks.com> on Saturday February 18 2023, @09:06PM (#1292443) Homepage Journal

        I guess that's better than a "series of tubes..."

        It doesn't really matter, since you have the ignorant leading the unlearned.

        --
        mcgrewbooks.com mcgrew.info nooze.org
        • (Score: 2) by JoeMerchant on Saturday February 18 2023, @09:23PM

          by JoeMerchant (3937) on Saturday February 18 2023, @09:23PM (#1292450)

          Scary part is, it's no worse today than in the past, mostly better actually, but much more visible.

          TIATA - transparency is always the answer.

          --
          🌻🌻 [google.com]
    • (Score: 5, Insightful) by Thexalon on Friday February 17 2023, @10:05PM

      by Thexalon (636) on Friday February 17 2023, @10:05PM (#1292287)

      If the senators are really really mad, it's because they themselves lost a bunch of money in it. Most of 'em are psychotic enough that they won't care all that much about the people around them getting burnt, but when it's their own portfolio that's an emergency.

      --
      The only thing that stops a bad guy with a compiler is a good guy with a compiler.
  • (Score: -1, Flamebait) by crafoo on Friday February 17 2023, @08:53PM (2 children)

    by crafoo (6639) on Friday February 17 2023, @08:53PM (#1292275)

    I assume most here know: all of politics is performative art. They all get along pretty well, actually. No lawmaker is 'hopping mad" about anything they would willingly get on the record and talk about. They are especially not mad about retarded cattle coming to them and saying, "government government government! I'm a big dumb cow and I got tricked by those tricky jews again!"

    • (Score: 5, Touché) by cmdrklarg on Friday February 17 2023, @11:01PM

      by cmdrklarg (5048) Subscriber Badge on Friday February 17 2023, @11:01PM (#1292298)

      You know, some of your posts would at least be interesting if you didn't have a woody for jew bashing. Give it a rest, eh?

      --
      The world is full of kings and queens who blind your eyes and steal your dreams.
    • (Score: 2) by mcgrew on Saturday February 18 2023, @09:08PM

      by mcgrew (701) <publish@mcgrewbooks.com> on Saturday February 18 2023, @09:08PM (#1292444) Homepage Journal

      What did the Jews ever do to you? Don't you realize that only assholes are racists and anti-semites? And I sure as hell hope you don't consider yourself a Christian.

      --
      mcgrewbooks.com mcgrew.info nooze.org
  • (Score: 2) by turgid on Friday February 17 2023, @08:58PM

    by turgid (4318) Subscriber Badge on Friday February 17 2023, @08:58PM (#1292276) Journal

    Even if there was any real value in crypto, it was hyped and manipulated six ways to Sunday.

  • (Score: 1) by Runaway1956 on Friday February 17 2023, @09:39PM (6 children)

    by Runaway1956 (2926) Subscriber Badge on Friday February 17 2023, @09:39PM (#1292280) Journal

    I'm no believer in crypto, and I think it's a waste. But - mankind has had various forms of currency throughout history. Native American wampum, old English tally sticks, old reliable minted coins of brass/bronze, silver, and gold, and today everyone deals in paper currency. Jewelry has always been a readily liquidated asset, almost a currency. And, I'm sure there are many currencies that I've never even considered. And, you know what? Every time a people, a nation, an empire changed it's currency, someone lost big time, and others reaped those losses.

    Crypto may or may not become something worthwhile in the future. Politicians could possibly make it legal tender for all debts, public and private. I mean, it's as good as a tally stick! But, before that happens, there's going to have to be a lot of legislation passed, regulations established, and common sense rules applied.

    But, like every other bit of recent technology, the politicians just sit on their thumbs, waiting for a major crisis before they get around to even trying to understand the tech.

    One thing I'm sure of: Crypto won't become legal tender in what remains of my life!

    • (Score: 2) by DannyB on Friday February 17 2023, @09:57PM (1 child)

      by DannyB (5839) Subscriber Badge on Friday February 17 2023, @09:57PM (#1292286) Journal

      One thing about paper currency is that it is a technology race against the counterfeiters. The government can spend a ton[1] of money on the US Mint to print notes that have security features easy to verify and difficult to forge.

      Just how difficult to forge is the challenge for both sides.

      [1]A metric ton of money, not an Imperial units ton of money.

      --
      The lower I set my standards the more accomplishments I have.
      • (Score: 2) by JoeMerchant on Friday February 17 2023, @10:32PM

        by JoeMerchant (3937) on Friday February 17 2023, @10:32PM (#1292293)

        It would seem that, for reasons I do not fathom, the U.S. has encouraged the easy forging of U.S. currency in recent decades, falling far behind Europe and most of the developed world, only recently starting to step up the paper tech to something approaching state of the art levels.

        --
        🌻🌻 [google.com]
    • (Score: 2) by JoeMerchant on Friday February 17 2023, @10:30PM (2 children)

      by JoeMerchant (3937) on Friday February 17 2023, @10:30PM (#1292292)

      If the U.S. Government wants to issue U.S. crypto dollars, they can, as easily as they can print paper ones, and the implications to the economy will be minimal. They'll have to build and vet the systems, they'll have to pay off Visa and Mastercard to compensate for their lost revenue - possibly by letting them participate in the system build and test as consultant/vendors. This is vastly different from the floating value bitcoins, ripple, ether, etc. of recent hype.

      --
      🌻🌻 [google.com]
      • (Score: 2) by zocalo on Saturday February 18 2023, @08:49AM (1 child)

        by zocalo (302) on Saturday February 18 2023, @08:49AM (#1292346)
        Visa, Mastercard, etc. manage the blockchain? For a fee, naturally. Governments, at least in nominally democratic regimes with due process, will need at least some separation between their state-backed cryptocoin blockchains and their ability to access it for privacy and legal reasons, even if it can be trivially by passed with a court order. Then again, it could still be pretty much BAU - only it's a short term loan of tokens that have to be paid back on time before outrageous interest rates come into play?

        Much as I think BTC et al are a massive scam, I think state-backed digital currencies are inevitable at this point. In some countries it's possible to be pretty much physical fiat cash free already, especially with contactless payment cards, so it's hardly a major step to deprecate tangible coinage and notes entirely, at whih point why not a stable coin pegged to the legacy currency it's replacing? Let's face it, the tech community didn't kill crypto quick enough for politicians to not see the rather obvious Orwellian benefits of a state being able to see *every* *single* *transaction* (what, you think state-backed crypto is going to allow for anonymous wallets?), and it's now almost certainly too late to do so.

        I don't think they'll get it right first time, or second or third for that matter, and criminals are going to make bank with each flaw, but they've clearly seen (or been sold a lie) on the potential for a massive reduction in tax fraud, criminal activities, and other "below the radar" financial transactions that rely on untraceable bundles of notes changing hands. For the person on the street what really changes? As long as they can go to some outlet and tap/pin their way through a transaction with a plastic card/smart device, it's BAU - tap, tap, done - whether that results in some virtual fiat going between two accounts or some crypto tokens going between two wallets, all managed by third parties, is largely immaterial.
        --
        UNIX? They're not even circumcised! Savages!
        • (Score: 2) by JoeMerchant on Saturday February 18 2023, @01:45PM

          by JoeMerchant (3937) on Saturday February 18 2023, @01:45PM (#1292365)

          Well, if that fee is cost+ instead of a slice of each transaction, I am 100% in favor of the transition.

          I would also be in favor of a little biblical revival of the ban on usury, or at least capping it at some multiple of inflation like 1.5

          >Orwellian benefits of a state being able to see *every* *single* *transaction*

          I really don't understand the early years of BTC fanboi cheerleading about the (non existent) "anonymous benefits" of Blockchain unless it was propped up by some agent or agency pushing for the popular adoption of, as you correctly say, absolutely 100% tracking of ALL transactions.

          Maybe there is still hope for some kind of "privacy coin" layer to be as anonymous as cash you pull from an ATM which video records your transaction at that point but then gives you fungiblle paper with serial numbers on it....

          >criminals are going to make bank with each flaw

          Always, but what will the criminal take ratios be: muggers vs extortionists vs usurers vs kleptocrats vs legitimate taxes that return some benefits vs the desired transactions of value?

          Cashless barter, for the win.

          --
          🌻🌻 [google.com]
    • (Score: 2) by hendrikboom on Monday February 20 2023, @04:47AM

      by hendrikboom (1125) Subscriber Badge on Monday February 20 2023, @04:47AM (#1292672) Homepage Journal

      What gives fit currency its value is that somehow you have to acquire enough of it to pay your taxes.

  • (Score: 2, Insightful) by DadaDoofy on Friday February 17 2023, @11:28PM

    by DadaDoofy (23827) on Friday February 17 2023, @11:28PM (#1292300)

    And caveat emptor. No, you don't get a do over.

  • (Score: 3, Insightful) by Opportunist on Saturday February 18 2023, @12:28AM

    by Opportunist (5545) on Saturday February 18 2023, @12:28AM (#1292305)

    What the hell don't you get about a Ponzi scheme? Is even that too complicated for you?

    Ok, roll in the ChatGPT, it's time to replace the useless spongers with a small script.

  • (Score: 2) by MIRV888 on Saturday February 18 2023, @03:54AM (3 children)

    by MIRV888 (11376) on Saturday February 18 2023, @03:54AM (#1292321)

    A way for criminals be they the politician, drug lord, or hacker to send or receive money in what theoretically is an anonymous manner.
    Everything else is just a pyramid scheme.

    • (Score: 4, Touché) by captain normal on Saturday February 18 2023, @05:18AM (2 children)

      by captain normal (2205) on Saturday February 18 2023, @05:18AM (#1292333)

      You mean just like cash...

      --
      Everyone is entitled to his own opinion, but not to his own facts"- --Daniel Patrick Moynihan--
      • (Score: 3, Informative) by mcgrew on Saturday February 18 2023, @09:14PM

        by mcgrew (701) <publish@mcgrewbooks.com> on Saturday February 18 2023, @09:14PM (#1292445) Homepage Journal

        Cash is based on the might and power of governments. Crypyo is based only on wishful thinking and greed. There's no underlying value to it, unlike currency, IOUs, stocks, or bonds. A wish and a prayer. Some say Ponzi, I say it's even stupider than falling for a Ponzi scheme; most of them at least pretend to be backed by something tangible.

        --
        mcgrewbooks.com mcgrew.info nooze.org
      • (Score: 0) by Anonymous Coward on Sunday February 19 2023, @04:44PM

        by Anonymous Coward on Sunday February 19 2023, @04:44PM (#1292576)
        However, the government of the United States is obligated to accept US dollars in payment for the taxes they levy and in payment for other debts owed to it. The same is true of all national currencies. That is a major part of what gives ordinary cash its stability: some national government backs it up. Is anyone out there similarly obliged to accept any cryptocurrency as legal tender for all debts public and private?
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