The collapse of cryptocurrency exchange FTX should be a “wake-up call” that prompts tougher enforcement of existing laws and spurs Congress to plug holes in regulations for crypto, Sen. Elizabeth Warren wrote in an op-ed Tuesday.
Writing in the Wall Street Journal, the Massachusetts Democrat said regulators and lawmakers must act “before the next crypto catastrophe takes down our economy.”
FTX, which is based in the Bahamas, filed for bankruptcy on Nov. 11.
Warren wrote that if FTX founder Sam Bankman-Fried or other executives committed fraud, “then federal prosecutors should send them to prison.”
But she also called on the Securities and Exchange Commission to take a harder line on crypto, saying the agency “has fallen far behind as the crypto industry has drawn in millions of new investors.” Warren wrote that Congress should give the SEC, along with the Justice and Treasury departments, more funding.
The op-ed by Warren comes as at least two congressional committees are planning hearings into the FTX debacle. Treasury Secretary Janet Yellen has also said more regulatory oversight is needed for the industry.
Democrats will keep their majority in the Senate following this month’s midterm elections, while Republicans will control the House of Representatives when the new Congress convenes in January. The implosion of FTX, however, has drawn bipartisan scrutiny.
At a Senate hearing last week, Tennessee Republican Bill Hagerty said that had bank regulators passed better crypto regulation, FTX wouldn’t have been forced to be in the Bahamas — and client money would have been protected.
Sen. Pat Toomey, a Pennsylvania Republican, said during the hearing that FTX’s collapse wasn’t caused by the type of assets the firm held, but by how the company used them, suggesting that the crypto exchange’s failure isn’t an indictment of digital assets.