The downsides of crypto are common, and the industry’s most vocal and well-known executives have faced significant legal trouble in recent years.
You know the names:
- Sam Bankman-Fried, sentenced to 25 years
- Changpeng Zhao, released after four months
- Nader Al-Naji, arrested and (if convicted) faces a maximum sentence of 20 years in prison
- Arthur Hayes, six months of home confinement
- Do Kwon, arrested and could potentially face significant prison time
- Mark Karpeles, arrested in Japan over legal issues with Mt. Gox
- Alex Mashinsky, arrested in 2023 and currently on trial
- Charlie Shrem, pleaded guilty in 2015 and served a year in prison
Crypto.news has been collecting feedback on whether the crypto industry has a serious leadership problem or is simply suffering from a few bad apples. At first glance, this seems like a fertile ground for shady activities.
But then again, “is it worse than anything else that exists?” » asks Anthony Scaramucci, founder of SkyBridge Capital.
“You could say there are bad apples in other areas of finance,” Scaramucci told us via Saxo. “I would maintain that it’s no worse than anything else. I would say we are in the process of cleaning up.
Biden was “too aggressive”
Scaramucci, whose hedge fund adopted Bitcoin (BTC) as an offering in 2020, has a prolific career in finance, after spending seven years at Goldman Sachs.
He also served as White House communications director for 11 days under former President Donald Trump.
Scaramucci has since soured on Trump and endorsed Vice President Kamala Harris for the 2024 presidential election. He even revealed at the TOKEN2049 conference in Singapore that he and other cryptocurrency advocates were collaborating with the Harris campaign to craft more industry-friendly policies if she wins on Election Day, November 5.
For crypto investors, that’s exactly what they’re looking for: an insider who knows the industry and can make it in Washington, DC. Their main gripe so far is with the Biden administration and the current leadership of the U.S. Securities and Exchange. Commission (SEC).
In 2023, SEC Chairman Gary Gensler, a Biden appointee, initiated 46 enforcement actions related to cryptocurrencies. This represents a 53% increase from 2022, according to Cornerstone Research.
Lawmakers may have been “embarrassed” by FTX founder Bankman-Fried, Scaramucci adds. Bankman-Fried was found guilty of misappropriating approximately $10 billion in client deposits (Scaramucci’s SkyBridge was hit during the FTX collapse).
Since then, the SEC has become stricter. Gensler has taken action against major players such as Binance, Coinbase, Ripple and Terraform Labs. This sparked numerous legal battles and high-profile cases.
Most cryptocurrency tokens are considered securities under U.S. law and, therefore, fall under SEC oversight.
“I thought they (the Biden administration) were too aggressive in terms of their anti-crypto positioning,” Scaramucci said. “There was no need to be so aggressive.”
Other crypto professionals share a similar sentiment. Tim Kravchunovsky, founder and CEO of decentralized telecommunications company Chirp, says these enforcement actions taken by the SEC seemed more like attacks than constructive oversight.
“Crypto investors have faced confusion, inconsistent policies, and sometimes outright hostility,” Kravchunovsky said of the past four years. “Instead of fostering innovation or providing clarity, the (Biden) administration’s actions have created anxiety, leaving investors uncertain about the future of the space.”
Trump does a 180
Crypto’s public relations nightmare continued last week when US prosecutors filed charges against 15 people from four companies: Gotbit, ZM Quant, CLS Global and MyTrade.
The companies engaged in fraudulent practices intended to manipulate the market, according to the FBI.
But scenarios like this “do not represent the entirety of cryptography,” Kravchunovsky insists.
“The industry doesn’t have a leadership problem, it has a trust problem,” he says. “Every time someone like Sam Bankman-Fried makes headlines about fraud, the media lumps the entire industry together. But remember that in any industry where money flows, so do opportunists and criminals. This is not unique to cryptography.
Indeed, crime permeates every corner of finance. By 2023, more than three trillion dollars of illicit funds would have passed through the global financial system. This trend is expected to continue, largely due to the rise of digital technologies, which provide new opportunities for criminals.
“It is unfortunate that there is a growing list of arrests and charges among high-profile crypto executives,” said David Morrison, senior market analyst at Trade Nation. “Some have clearly been bad actors who bamboozled and defrauded their customers, deliberately broke regulations for their own gain, etc. But this is not unusual when new technology and money collide.”
It’s a bad image, but Morrison hopes to improve “if regulation continues to develop in a way that is useful to the sector as a whole”.
“This will require regulators and policymakers with a real interest and understanding of cryptos, valuing their importance while welcoming their potential,” he said.
It’s no wonder the industry sees Trump’s possible re-election as a beacon of hope. The 78-year-old candidate saw an opportunity to court a passionate part of the electorate that had become frustrated with the Biden administration. Gemini co-founders Tyler and Cameron Winklevoss are two of its biggest donors.
Once a crypto skepticalTrump, twice impeached, is now one of the industry’s most ardent cheerleaders. He is even preparing for the public sale of his own token under the banner of World Liberty Financial, a company he launched with his three sons, starting Tuesday, October 15.
Polymarket, a platform that allows users to bet on real-world events using cryptography, currently has him ahead of Harris in a 2024 presidential prediction by more than eight percentage points.
But in an industry marred by illegalities, is Trump – the first former US president to be convicted of felony crimes – the best bet for crypto? Even the Republican’s staunchest supporters have a bad feeling about World Liberty Financial.
“Whether you like Trump or not, his company World Liberty Financial shows that he is not afraid of crypto,” Kravchunovsky said. “Say what you want about the hype, but at least he’s not trying to kill the industry with endless regulations.”
Tips for Harris
Crypto is one area where Harris, 59, diverges from Biden. Last month, at an event in Manhattan, the Democratic candidate said she wanted to embrace “innovative technologies” like digital assets while protecting consumers and investors.
Billionaires Mark Cuban and Ben Horowitz are both in the mix; the same goes for Chris Larsen, co-founder of Ripple, who made his first recorded donation of cryptocurrency to his campaign.
If Harris wins the election, Morrison offers some advice on behalf of his crypto peers: “If Ms. Harris wins next month, then please don’t relegate cryptocurrencies to the ‘can’t be bothered’ category “.
Crypto has the potential to help the unbanked and “spur entrepreneurship in some of the poorest and most neglected places on our planet,” he adds. “Don’t dismiss it just because Donald Trump talks about it so much.”
Kravchunovsky agrees.
“If Harris takes office, she must understand that crypto is not just about speculation: it is a transformative technology that could redefine industries,” he said. “But here’s the thing: She needs to listen to people who actually understand blockchain, not just hype artists or bureaucrats who think in terms of control. It’s not about shutting it down, but about creating a healthy environment for it to thrive responsibly. The United States cannot afford to let fear or misinformation guide its policy.”
As for Scaramucci, the former Trump advisor turned Harris advisor, doesn’t seem too worried about this booming asset class.
“The best days for crypto are yet to come,” he says.
