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Former SEC Official Doubts FTX Crash Will Prompt Congress to Act on Crypto Regulations
Lisa Braganca said lawmakers are in a tough spot because many of them had a close relationship with Sam Bankman-Fried, the now-disgraced FTX founder.
Updated May 9, 2023, 4:02 a.m. Published Nov 16, 2022, 6:34 p.m.
The collapse of FTX may spur more calls for regulation on Capitol Hill, Lisa Braganca, a former enforcement branch chief at the U.S. Securities and Exchange Commission, said, but she is doubtful about whether Congress will act.
“I have serious doubts still about whether Congress wants to step in and do something rather than letting the SEC and the CFTC (Commodity of Futures Trading Commission) figure it out,” Braganca said during an appearance on CoinDesk's “First Mover” program on Wednesday. “This is complicated.”
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Read more: The Role Regulators Played in the FTX Fiasco / Opinion
In the past, the CFTC and SEC have called on Congress to set clear guidelines for regulating digital assets and divvying up the task between the two agencies.
FTX, a crypto exchange that was founded and led by entrepreneur Sam Bankman-Fried, has put regulators in a tough spot, partly because of Bankman-Fried's close relationship with lawmakers, Braganca said.
“Look at how much work SBF was doing to get someone to step up and get regulation done, and now it’s all fallen through,” she said.
Braganca added that lawmakers aren't equipped to “just figure this all out on their own” and need experts and agencies they can trust.
FTX filed for bankruptcy protection in the U.S. last week following a series of events that started with a CoinDesk report about the balance sheet of its sister company, Alameda Research, and the firm now faces a federal investigation, creating a “bigger mess” for forming new regulation, Braganca said.
“It created all kinds of obstacles to regulation,” she said.
Read more: FTX’s Failure Is Sparking a Massive Regulatory Response
Meanwhile, Bankman-Fried is placing his own legal team in a tight spot after he took to Twitter to give his own spin on the events, despite several ongoing criminal investigations.
“All the lawyers in this case are apoplectic right now,” Braganca said. “This is absolutely something you do not want your clients doing.”
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