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Congressmembers Tried to Stop the SEC’s Inquiry into FTX

216 points6 hoursprospect.org
ericbarrett5 hours ago

The eight congressmen:

Tom Emmer (R-MN)

Warren Davidson (R-OH)

Byron Donalds (R-FL)

Ted Budd (R-NC)

Josh Gottheimer (D-NJ)

Jake Auchincloss (D-MA)

Ritchie Torres (D-NY)

Darren Soto (D-FL)

The signed letter: https://emmer.house.gov/_cache/files/0/c/0c7fc863-7916-4b19-...

scaredginger4 hours ago

Why do they keep telling us bipartisanship is dead?

godzillabrennus3 hours ago

80% is still agreed upon by the uniparty. It’s the fringes on either side that make it so the government can’t agree on the other 20%.

mushbino3 hours ago

That's how they market it anyway

Xeoncross4 hours ago

I think you'll find a lot of the things they tell us are wrong

smitty1e3 hours ago

Because once Cthulhu devoured the Ds and Rs there was no "bi", only bones.

qup3 hours ago

If one of the Ds or Rs was flipped, we could all condemn the most-guilty party with great conviction.

smt883 hours ago

I don't know anyone with basic knowledge of Congress who doesn't understand that lobbying heavily influences both parties, although not at all equally.

dotancohen1 hour ago

Possibly, but what percentage of the population actually has the basic knowledge you presume?

smt8857 minutes ago

A large percentage. There's a reason Trump's “drain the swamp” slogan resonated with so many people.

mc325 hours ago

Their parties should kick them out and replace them with more principled people.

tartoran5 hours ago

That would be ideal but in reality these party members raised money for the party so.. they’re in 0 trouble as far as their party is concerned. The system is a farting contest that enables this behavior. Solution would be to do away with the 2 party system and make parties more responsible with consequences as being completely voted out if corruption isn’t handled. Now both Reps and Dems are corrupted and they known we have no other choice

s3r3nity4 hours ago

>Solution would be to do away with the 2 party system and make parties more responsible with consequences as being completely voted out if corruption isn’t handled.

Or, you know, vote for limited government to limit the blast radius.

The fact that the greatest investor in the US is Nancy Pelosi, AND she actively prevented legislation limiting insider trading by US Congress Members, should tell you that the government is not going to just get better by hoping the right people are voted-in. You need to systemically cut off their power and give that power back to the people.

EDIT: lol heaven forbid you propose smaller government with legitimate facts on HN lest you get downvoted

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oneplane3 hours ago
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belltaco3 hours ago
+1
lanternfish3 hours ago
themitigating45 minutes ago

"The fact that the greatest investor in the US is Nancy Pelosi"

Is that a legitimate fact? I'm pretty sure Warren Buffet is better than her, maybe he's not the best but the point is you lied then got mad when downvoted

rqtwteye4 hours ago

She is also the biggest fundraiser and therefore really important for the party.

JumpCrisscross47 minutes ago

> parties should kick them out and replace them with more principled people

Their parties could evict them. But they’d retain their seats. Their voters gave those to them.

justin6627 minutes ago

If their parties had something like a consensus, under the constitution congress could vote to expel them for ethics violations. Of course, congresspeople don't like to punish congresspeople for ethical lapses too vociferously or too frequently, for some obvious reasons...

tsol4 hours ago

The thing about democracy is, even if the people make a bad choice it's still democracy

sbuttgereit3 hours ago

From "Teller Reveals His Secrets" (https://www.smithsonianmag.com/arts-culture/teller-reveals-h...)...

"7. If you are given a choice, you believe you have acted freely.

[...]

When I cut the cards, I let you glimpse a few different faces. You conclude the deck contains 52 different cards (No. 1—Pattern recognition). You think you’ve made a choice, just as when you choose between two candidates preselected by entrenched political parties (No. 7—Choice is not freedom)."

It may still be democracy, but the task of the people isn't to pick the best or most desirable policy/candidate/etc. It's to pick from the presented selections. If all choices are bad, nothing good will come of it no matter what you call it. Add an option for "None of the above/Do-over" and I'll have more faith in democracy.

kodah3 hours ago

> Add an option for "None of the above/Do-over" and I'll have more faith in democracy.

I would really love this and to end PACs.

themitigating1 hour ago

Wouldn't misinformation also be a similar situation. If you make a choice based on misinformation or incomplete information, is that democracy.

rjzzleep4 hours ago

"The thing about democracy is, even if the people abuse their power it's still okay" - well, not much different from a non-violent dictatorship then.

rayiner4 hours ago

No, it’s exactly the opposite. A system that puts unelected prosecutors of “abuse of power” above elected officials would be a non-violent dictatorship.

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dylan6044 hours ago
themitigating1 hour ago

If they punished them, especially in a way that would cause then not be funded in their next election, they could just switch parties.

nradov4 hours ago

Political parties have no legal authority to expel a member from Congress. Parties are voluntary private organizations with no formal role in any branch of government. The most the parties can really do to punish a politician is to withdraw financial and organizational support, which might make reelection difficult.

koolba4 hours ago

Both the House and the Senate make their own rules, and that includes the ability to unseat a member. If they really wanted to, they could (but they won’t).

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fshbbdssbbgdd4 hours ago
joxel3 hours ago

Au contrare, Ted budd just got promoted to senator.

Consultant324524 hours ago

No matter who you vote for, the government wins every election.

themitigating59 minutes ago

What does this even mean? The government (the elected portion) isn't an entity outside of the people that are elected.

rodgerd4 hours ago

Like... they guy running on whether he wants to be a warewolf or vampire? The lady worried about Jewish space lasers?

Just getting people who are sufficiently in touch with reality that they're merely corrupt seems like a win at this point.

blamazon3 hours ago

To be fair, that werewolf or vampire thing was the most cogent part of the campaign so far.

rodgerd3 hours ago

I would like to disagree with you.

I can't, but I'd like to.

MichaelCollins3 hours ago

This comment makes no sense in the context of America. I guess you're from a country with some sort of Parliamentary system where governments are formed when a party is elected?

In America, parties aren't elected and don't form governments. Accordingly, an American political party cannot kick out a congressman, much less replace one. To remove a congressman requires a two third vote (from congress, not from a political party); this never happens in the modern era without a criminal conviction as the impetus. And nether congress or a political party can simply bring in a new congressman; you'd need another election for that.

lostmsu2 hours ago

It still can be done for the next term. AFAIK there is no limit on terms and people stay in congress far too long for my taste.

googlryas4 hours ago

How much was donated to them versus other senators?

HarryHirsch4 hours ago

A sufficient amount of money, clearly.

dylan6044 hours ago

"The March letter from eight House members—four Democrats and four Republicans—questioned the SEC’s authority to make informal inquiries to crypto and blockchain companies, and intimated that the requests violated federal law."

This wasn't an investigation into just FTX. This was a broader investigation into crypto companies, plural. The current post title of "Inquiry into FTX" seems to be editorializing. Dang must be slow on the tryptophan to not post the usual HN guidelines reprimand

alsetmusic4 hours ago

It’s the title of the article which makes it appropriate here. That it’s a bad title, however, is not in dispute.

peyton3 hours ago

I mean there’s zero mention of FTX in the letter. Perhaps a question mark is in order.

themitigating48 minutes ago

I wouldn't blame the poster but the source which is using an extremely manipulative headline.

racked4 hours ago

Yes, the crypto world is a hornet's nest, but the non-crypto world is ruled by bankers with an ever-increasing thirst for control over our lives. (Read up about the Fed's new CBDC plans)

As far as I'm aware, Monero and cash are the only practical ways to pay anonymously.

So, who are worse? The congressmen who (perhaps in this case naively) tried to avoid overregulating crypto, or the remaining congressmen who continue to condone an economy completely manipulable by private bankers by way of the Federal Reserve?

kelnos55 minutes ago

Intent matters. Even if these congresspeople are correct that the SEC shouldn't be doing what they're doing, if the reason the congresspeople wrote that letter is because they received "donations" from cryptocurrency companies or PACs, then I think we should still give it some scrutiny.

brian-armstrong4 hours ago

Regulating a sketchy Ponzi scheme with vaguely crypto trappings != regulating crypto

throwaway17771 hour ago

They both suck and both should be criticized. But also both crypto and banks are diverse and not all bad.

spir3 hours ago

There are politicians and media publications protecting Sam Bankman-Fried's criminality, but these congressmen aren't among them.

The letter in this article was written in March. FTX's long-term fraud has only been known since early November.

Dylan168073 hours ago

You don't have to know about specific bad actions to shield the entity that is doing them.

JamesianP29 minutes ago

But if you fight against overzealous enforcement you will necessarily be shielding some bad actors along with the good.

Not that I'm personally against the SEC (and other agencies) crossing into crypto and interpreting their mandate broadly, rather than being overly conservative and waiting for new laws while the scammers run wild. But in other areas these paperwork demands could be a huge burden...

themitigating56 minutes ago

True but it changes the amount of guilt right?

Maybe they were just helping companies donating to then, the letter is about cryptocurrenty in general.

Animats3 hours ago

"Enforcement powers, while conceptually broader with respect to non-SEC regulated entities, are still circumscribed by statute, federal judicial review, congressional oversight and the Commission’s own policies and procedures for initiating and conducting inquiries and investigations."

Now that's being squishy-soft on crime. That's the point to make when those members of Congress come up for re-election. They're soft on crime.

The basic law the SEC enforces, the Securities Exchange Act of 1934, is pretty clear on what's a security. The Supreme Court has clarified that. Investment of money, expectation of profit, common enterprise - it's a security. That's called the Howey Test. It's also been established that what you call it or how it works doesn't matter. There have been, over the years, many imaginative schemes cooked up to get around this. The Howey case involved tradeable orange grove harvesting rights in Florida. That was held to be a security.

The crypto crowd has been yammering for years "but this is different". Well, it's not.

The scams around crypto are classic. It's usually insiders stealing the money. The crashes are also classic. It's someone being over-leveraged when something goes down. This is not financial innovation.

BuyMyBitcoins2 hours ago

>”The crypto crowd has been yammering for years "but this is different". Well, it's not.”

In what way? Some cryptocurrencies have been declared securities, while many have not. Those such as Bitcoin and Ethereum have been around for long enough that if they were going to be ruled as securities via Howey, that would have surely been done by now.

Animats15 minutes ago

That was done years ago. The SEC cracked down on initial coin offerings back in 2018. They're still working down the backlog.[1] The "cyber" enforcement staff was doubled a few months back to catch up.

The SEC does not consider Bitcoin to be a security because there's no "common enterprise". It's distributed more like a mined commodity. Miners are competitors. But where there's an issuer, or "minting", or "pre-mining", or anything like that, you can buy it, and it's expected to go up, it's clearly a security.

Etherium is in an interesting position with the shift to proof of stake. That may have made it a security, because it's now controlled by voting owners, just like a stock. So now there's a "common enterprise", unlike in the "mining" phase.

The big question now is exchange regulation. Are Bitcoin exchanges and brokers going to have to register with the SEC, pay for and be covered by SIPC insurance, and be regulated by FINRA? After FTX, that's probably coming. FTX acted like a retail broker, after all. Nobody runs Super Bowl ads or buys stadium naming rights for something sold only to institutional clients.

The law in this area looks at the economic realities, not the form. If it looks like a security, is marketed like a security, and is bought and sold for the same reasons as securities, it's a security. Doesn't matter what you call it.

[1] https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...

JumpCrisscross44 minutes ago

> that would have surely been done by now

We are getting damn close to that being done through statute in the U.S.

MetaMonk5 hours ago

"Blockchain Eight" when you coulda had "Chain Gang"? Cmon.

IfOnlyYouKnew4 hours ago

It's a reference to the "Keating Five".

MetaMonk3 hours ago

Didn't know about that scandal, but it's also just standard to uncreatively (but tersely) name important events etc. with a structure of <noun/adjective> <number> (Boston Six, Gang of Four).

skippyboxedhero3 hours ago

The SEC tried to stop the SEC's inquiry into FTX.

Gensler said earlier this year that the SEC should be regulating FTX. SBF unleashes his torrent of mid-term money and then Gensler was saying up until FTX went bust (he was reportedly lobbying for them a few weeks before) that it should be the CTFC's job (which was the position that FTX were lobbying for as they had also bought a few people at the CTFC).

neilv5 hours ago

Let's not Friday (Holiday) News Dump this possible story.

If there's something to it, next week people will have more time to look into it, without it spoiling their turkey appetite.

themitigating55 minutes ago

Not everyone celebrates Thanksgiving

hinkley25 minutes ago

If the topic is a US domestic matter, most of the people who need to pay attention do.

This idea that having accurate information about things happening on the opposite side of the world is going to change anything? You don't have to think about it for more than two seconds to see that's not true. It's an Illusion of Control.

Exposing something is only the first step do changing it. But you can expose things and not change a damn thing.

d1str05 hours ago

This is quite an inflammatory title by HN standards.

UberFly17 minutes ago

It's the same title as the article, but yea, click bait title all the same.

yalogin1 hour ago

When it comes to doing shady things and not having the backs of regular people there is a lot of unity and bipartisanship in congress.

jmpman5 hours ago

Just like the Keating Five. These politicians should be vilified.

AnimalMuppet4 hours ago

In March. And not FTX specifically, but crypto in general.

So, as d1str0 said, yes, very inflamatory (and misleading) headline.

encryptluks23 hours ago

The headline is still accurate, as stopping SEC inquiry in crypto would have the same effect.

themitigating53 minutes ago

It's accurate but extremely manipulative because it implies this the congressman were directly helping FTX.

AnimalMuppet2 hours ago

Would an inquiry in March have prevented the FTX mess? Maybe. It would have been good to at least give it the chance.

But in the current situation, the headline reads like these 8 tried to stop an inquiry specifically into FTX after the collapse, which is totally not what happened.

MichaelCollins2 hours ago

Accurate maybe, but very imprecise.

ourmandave5 hours ago
dragonne3 hours ago

FYI this site isn't paywalled, it just has an obnoxious popup.

zx80802 hours ago

Tell me it's not a corruption.

themitigating52 minutes ago

I can tell you the headline is manipulative BS because they were questioning the ability of the SEC to investigate these types of companies in general and they didn't specifically mention FTX

rdxm5 hours ago
egberts14 hours ago

Paywall

woodpanel2 hours ago

You know things are looking bad if out of the gazillions of $ FTX laundered into the DNC they front-run their "reports" with the handful Republicans which were allowed to nibble at the trough.

Meanwhile, SBF is still not in jail and on the contrary even invited to speak: https://twitter.com/andrewrsorkin/status/1595517635441090565