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

Custodia Bank CEO Caitlin Long has slammed regulators and lawmakers in Washington DC for their “wrong crackdown” on the crypto sector, as well as ignoring warnings about major “fraud” allegedly perpetrated by the now bankrupt entity.

In a February 17 blog post titled “Shame On Washington, DC For Shooting A Messenger Who Warned of Crypto Debacle,” Long ripped into the government for its approach to crypto regulation, failing to protect investors and alienating good actors in the space:

“Washington’s missteps will only push risks into the shadows, leaving regulators playing whack-a-mole as risks keep popping up in unexpected places.”

Long emphasized that with his digital asset custody company, he “invites the worst of crypto while trying to create a legal and compliant alternative that relegates fraud to the trash heap. But […] most policy makers today seem to want to kill innovators with high integrity.

The CEO of Custodia Bank claims that his efforts to work with the government agency have finally backfired, as he recounts the negative events his company has been dealing with lately.

“Custody was simultaneously attacked by the White House, the Board of Governors of the Federal Reserve, the Kansas City Fed and Senator Dick Durbin (who combined liquid and solvent banks 100 percent non-leveraged with FTX in a speech on the floor of the Senate),” he said, adding:

“Custodia is trying to be federally regulated – the very result bipartisan policymakers claim to want. But Custodia has been rejected and is now vilified for daring to come through the front door.

His sentiment echoes figures such as Coinbase CEO Brian Armstrong, who has repeatedly suggested that agencies such as the Securities and Exchange Commission (SEC) have reacted frostily to the firm’s efforts to maintain dialogue in good faith.

Earlier this month, Armstrong also criticized the lack of regulatory clarity in the US and what appeared to be a “regulation by enforcement” approach following the SEC’s move to shut down staking service Kraken on February 9.

“Today’s regulators and lawmakers in Washington should be ashamed of their failure to stop crypto criminals. DC is demanding scalps,” Long wrote in a blog post, adding:

“The call for tough action now comes from many policy makers who are attracted to the fraudsters. In a 180 degree turn, they are now throwing the baby out with the bath water.

The dangers of being ignored

On Twitter, Long also suggested that before some crypto companies in 2022, he and many others have tried to warn Washington and “help law enforcement to stop” the big fraud, but to no avail.

related: SEC vs. Kraken: A one-off or open salvo in the attack on crypto?

Long stated that he revealed publicly for the first time that he had “handed over evidence to law enforcement about possible crimes” committed by an unnamed crypto company “months before the company imploded and stuck millions of customers with losses.”

Co-founder and CEO of Kraken Jesse Powell responded to Long’s Twitter thread, and essentially supported his statement by noting that: “I can’t say that you are so angry that you have pointed out the big red flags and activities that are clearly illegal for the regulator to have only. he ignored the problem for years.