Crypto update: Coinbase, ECB, Blockchain Australia and FTX

European Central Bank experts slam crypto, exchanges blast the SEC, and FTX sues its former COO.

The ongoing spat between Coinbase and the SEC dominated last week’s crypto headlines, with Coinbase responding “[The SEC’s position is] untenable as a matter of law, and its assertion through this enforcement action offends due process and the constitutional separation of powers.” But several other key stories emerged.

ECB skepticism

Economist and member of the European Central Bank (ECB) Executive Board Fabio Panetta expressed skepticism in a speech titled: Paradise lost? How crypto failed to deliver on its promises and what to do about it. Panetta highlighted technical problems and high price volatility.

The speech continued: “The crypto ecosystem’s move away from its original goals towards more centralised forms of organisation, typically without regulatory oversight, is giving rise to substantial costs and an array of contradictions.”

Despite the economist’s reservations, the EU has been a leader in crypto regulation, enacting the Markets in Cryptoassets regulation (MiCA). Adopted in April, MiCA will come into force in 2024. Vishal Sacheendran, MENA & Europe Director at Binance, recently called MiCA a “regulation to rule them all”.

Regulation by enforcement

Blockchain Australia’s CEO recently remarked: “Regulation by enforcement is the equivalent of having a hammer and seeing everything as a nail. I don’t think that’s the right approach for Australia to be taking.” The remark seemed to be a criticism of the regulars in other jurisdictions, particularly the SEC.

Other exchanges have voiced their views on the matter. “We are preparing ourselves to robustly and vigorously defend ourselves in court. But in the meantime we have lots of loyal users we want to serve and two regulators, in Liechtenstein and Bermuda, scrutinising our every move,” Oliver Linch, CEO, Bittrex Global, said this week on The DeFi Download podcast: “What’s good about their regulatory regimes is that they’re bespoke, fit for purpose, and designed specifically for crypto. The job of regulation is to ensure fair markets and protect customers.”

FTX sues COO

In what is being seen as a bid to deflect from its failings, FTX sued its former CCO Daniel Friedberg.

“From 2017 through FTX’s implosion in November 2022, Friedberg advised Bankman-Fried, his trusted inner circle, and the FTX Group on legal and compliance matters and significant transactions, ignored the FTX Group’s glaring lack of internal controls, and served as a ‘fixer’ tasked with, among other things, paying off whistleblowers who threatened to expose the true fraudulent nature of the FTX Group enterprise,” the complaint said.

The complaint also laid the blame at the feet of Sam Bankman-Fried. “Friedberg and others facilitated the routing of billions of dollars in purported profits of the FTX Group to the FTX Insiders, and their families, friends, and other acquaintances through purported personal ‘loans’, bonuses, ‘investments’, and all other means of transfer, including real estate purchases and hundreds of millions of dollars in charitable and political contributions. Friedberg himself personally received millions of dollars in unjustified bonuses and other compensation.”