But this is theater. A defining characteristic of cryptocurrencies has always been considered to be their ability to exist outside governments and separate money from the state and all other governing bodies, regulations and laws that go along with it. That’s the point. When Bankman-Fried was ousted, many of his industry critics broke his self-imposed silence and denounced his efforts to work with (and potentially corrupt) government officials. Cryptocurrencies were not thought to work within the existing political economy. It was to transcend it. Bankman-Fried’s filthy influence operations appeared to be under the ultra-liberal concerns of those who wished to be completely free of government.
In recent years, the cryptocurrency industry has repeatedly called for “regulatory clarity,” accusing groups like the SEC of creating policies through arbitrary enforcement actions. For cryptocurrency critics, the landscape was very different. Cryptocurrencies have had regulatory clarity.—Existing securities and banking regulations have been sufficient to embrace even newer technologies like blockchain—But the industry ignored the law, ran recklessly, and blamed politicians for their mistakes. Some cryptocurrency advocates have blamed the Biden administration and SEC Chairman Gary Gensler for the FTX demise rather than the alleged criminal actions of Bankman-Fried and his associates. They said it was Gensler’s fault for not investigating FTX sooner, but that was the case. again An administration that didn’t clarify regulations has caused companies like FTX to set up stores abroad—Failure to adequately investigate by an agency such as the SEC.
It didn’t seem to matter that FTX, like other companies before it, may have started operations abroad. The reason was that crime was easy. Jurisdictional arbitrage has driven technology-oriented subversives to and fro between states and countries in hopes of finding the right mix of free market idealism and political fortitude to win markets and make new rules for their own way. It is a basic characteristic of people. It doesn’t necessarily break the law on purpose, it simply circumvents it. This is called the “Uber model” and is being applied even more relentlessly by cryptocurrency companies. Bankman-Fried, for example, was at various times based in Berkeley, Hong Kong and the Caribbean, with legal and financial winds blowing. He ran his over 130 dummy companies under various names around the world.
