Statement on FTX and pending regulatory crackdowns

Posted November 10, 2022 at 12:08 AM

The following statement can be attributed to Lia Holland (they/she) Campaigns and Communications Director at Fight for the Future:

“This week FTX, the second largest centralized global cryptocurrency exchange, was discovered to be insolvent through what one spectator characterized as “god tier” shenanigans. The resultant fallout for both non-US FTX customers and the overall cryptocurrency ecosystem is drawing the attention of US regulators. 

Gary Gensler said a crackdown is coming soon, Politico reports. Any regulation in response to the actions of these centralized corporations should be laser-focused to ensure that it is punishing or barring the bad behavior of specific bad actors, and not open source, decentralized, or community-owned alternatives to traditional top-down financial institutions. Regulators should not craft policies that favor or entrench entities like FTX at the expense of alternatives that may rise to compete with them and promote better digital rights for everyday people. 

Traditional financial institutions are abusive and exclusionary—one need only look back to 2008’s subprime mortgage crisis to recognize how bad behavior still runs rife even amid regulation. We need alternatives to these opaque, harmful structures, and the systemic financial surveillance they have normalized despite severe harms to traditionally marginalized communities. Continued development of decentralized, open source, and/or community owned alternatives to traditional financial structures remains a step in the right direction.

Lawmakers must proceed with care and ensure that any resulting regulations do not limit the first amendment right to code, undermine core digital and human rights like privacy, or chill the development of meaningful alternatives. Instead of overly broad sanctions on actual code, like we saw with Tornado Cash, or poorly drafted definitions like we saw in the 2021 infrastructure package, Congress should focus on consumer protections that ensure bad actors are reined in and users’ privacy, data, and investments are protected.”