As cryptocurrency fraud surges, CFTC Commissioner Christy Goldsmith Romero admits the regulatory challenges in policing it.
The growing menace of cryptocurrency fraud is proving too vast to be entirely policed, acknowledged a leading U.S. regulator on Tuesday, despite her agency’s earnest efforts to tackle numerous high-profile cases.
According to a report by Reuters published on May 2, 2023, Christy Goldsmith Romero, serving as one of the five commissioners at the Commodity Futures Trading Commission (CFTC), disclosed that cryptocurrency-related cases currently comprise around a fifth of the agency’s total caseload. This includes the recent civil actions instigated against renowned crypto exchanges Binance and FTX.
The surge of fraudulent activity within the cryptocurrency sphere is causing serious concern. At a white-collar crime conference held by the New York City Bar Association, Goldsmith Romero said, “There’s an overwhelming amount of fraud in the space. We are faced with the impossibility of policing all the fraud, but we can’t sit idle.”
In response to the escalating situation, CFTC Chairman Rostin Behnam has sought to enhance the agency’s power through increased legislative support explicitly aimed at overseeing spot crypto markets.
Goldsmith Romero rejected the notion of an ongoing power struggle, or “turf war,” between the CFTC and the Securities and Exchange Commission (SEC) over the task of regulating cryptocurrencies. She did, however, recognize that many new products in the industry have left the agencies in a state of flux, with regulatory frameworks “still being figured out.”
Goldsmith Romero also cautioned crypto companies against perceiving the CFTC as a more lenient regulator than the more financially robust SEC. “I take exception to the notion that the CFTC is a ‘light touch’,” stated Goldsmith Romero. “The epitaph ‘light touch regulator’ will never grace my tombstone.”
In a notable move earlier this year, the CFTC launched a lawsuit against Binance and its founder and CEO, Changpeng Zhao, alleging the operation of a sham compliance program. Zhao, however, dismissed the allegations, referring to the complaint as an “incomplete recitation of facts.”
The agency has also taken legal action against the now insolvent FTX exchange and its founder, Sam Bankman-Fried, accusing them of precipitating the loss of over $8 billion in customer deposits. Bankman-Fried has since entered a not-guilty plea to related criminal charges filed by the U.S. Department of Justice.