The stunning collapse of the world’s third-largest exchange has forced politicians to grapple with the costs of legislative inaction
By Tony Romm, the Washington Post
The sudden collapse of one of the world’s largest cryptocurrency exchanges rattled the nation’s capital this week, as lawmakers grappled with the wide-ranging fallout — and began to confront the consequences of neglecting the surging financial sector.
Only a few weeks ago, top Democrats and Republicans alike had been cashing campaign checks and working side-by-side with the vanguards of the industry, including FTX founder Sam Bankman-Fried, as they labored to craft new regulation in the frenetic, cutting-edge digital space.
Instead, Bankman-Fried unexpectedly became a potential case study of the costs of congressional inaction. While Washington dithered, he appeared to place risky bets that incinerated his fortune, jeopardized billions of dollars in Silicon Valley capital, and upended an entire ecosystem of cryptocurrency start-ups. The lawyer tapped to lead FTX in restructuring, who previously oversaw the bankruptcy of Enron, described the situation Thursday as a “complete failure of corporate controls.”
Investigators in the United States and abroad have opened probes into Bankman-Fried and his holdings. The Treasury Department has quietly placed calls to other large crypto exchanges to assess the risks of a broader contagion. And a slew of congressional committees has readied their own reviews, including a House inquiry announced Wednesday that could see Bankman-Fried testify under oath next month.
In the process, federal policymakers have been left to ask themselves a familiar, if uncomfortable question: Could they have prevented a crisis if they had paid close attention sooner?
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