Sen. Warren Warns Crypto May Take Down the Economy

Regulate Crypto or It’ll Take Down the Economy – WSJ

Many say crypto is a scam. Crypto advocates tout the technology’s world-transforming potential and argue that naysayers just don’t understand. Either way, it is past time for crypto to be subjected to the same basic rules as other financial activities. If the crypto industry can succeed without stealing from investors or providing money-laundering services to terrorists and drug dealers, that’s great—but we won’t know that until the loopholes are closed and the laws are rigorously enforced.

SEC Charges Goldman Sachs Asset Management for Failing to Follow its Policies and Procedures Involving ESG Investments

The Securities and Exchange Commission today charged Goldman Sachs Asset Management, L.P. (GSAM) for policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as Environmental, Social, and Governance (ESG) investments. To settle the charges, GSAM agreed to pay a $4 million penalty.

The SEC’s order finds that, from April 2017 until February 2020, GSAM had several policies and procedures failures involving the ESG research its investment teams used to select and monitor securities. From April 2017 until June 2018, the company failed to have any written policies and procedures for ESG research in one product, and once policies and procedures were established, it failed to follow them consistently prior to February 2020. For example, the order finds that GSAM’s policies and procedures required its personnel to complete a questionnaire for every company it planned to include in each product’s investment portfolio prior to the selection; however, personnel completed many of the ESG questionnaires after securities were already selected for inclusion and relied on previous ESG research, which was often conducted in a different manner than what was required in its policies and procedures. GSAM shared information about its policies and procedures, which it failed to follow consistently, with third parties, including intermediaries and the funds’ board of trustees.

Big Crypto’s Tired and Toothless Refrain

Crypto-focused law firm Hodl Law PLLC has sued the U.S. Securities and Exchange Commission, alleging that the SEC has failed to clarify its jurisdictional authority over digital assets and failed to define whether it views digital assets as securities. This lawsuit is perhaps one of the most ridiculous legal documents I have ever read regarding crypto (and that is saying a lot).

***

Big Crypto’s pivot to the tired and toothless refrain of berating the SEC after a dumpster fire like the FTX grift is not just a dubious deflection, it’s farcical and a flat-out ruse. It’s like Holmes or Balwani blaming the U.S. Food and Drug Administration for bogus blood test results from Theranos’ counterfeit blood test machines; like Hannibal Lecter blaming the U.S. Federal Bureau of Investigation for his killing spree; or like Oswald blaming the U.S. Secret Service for JFK’s assassination.

Private Equity Regulation Becomes Biden Administration FocusPrivate equity could use a few friends in Washington.

While buyout firms have been busy protecting their lucrative carried interest fee structure in Congress, Biden administration securities, antitrust and broadcast TV regulators have quietly been undermining the industry’s business model by proposing tough rules, slow-walking deals and scrutinizing acquisitions that would consolidate industries or result in job losses.

Sam Bankman-Fried, Elon, and a secret text

Elon Musk used Twitter, the platform he now owns, to gleefully mock the meltdown of the crypto exchange FTX. His “bullshit meter was redlining” when he met the crypto exchange’s founder, Sam Bankman-Fried, Musk has said.

But Musk was in a friendlier mood on May 5. Two weeks after clinching a deal to buy Twitter for $44 billion, he texted Bankman-Fried just after midnight and invited him to roll the $100 million stake he had owned for a few months into a privately held Twitter.

The previously unreported message, which was reviewed by Semafor, set in motion a chain of events that has bound the two men, whose companies are both in varying degrees of crisis. Bankman-Fried owns a sizable chunk of a now privately held and debt-laden Twitter. And Musk, who has publicly distanced himself from the crypto impresario since FTX failed earlier this month, now counts him as a financial partner in his effort to remake Twitter.

A crypto collective tried to get regulatory OK for tokens. It didn’t go well

American CryptoFed DAO LLC, which says its mission is to create a blockchain-based monetary system “with zero inflation, zero deflation and zero transaction costs,” is a rarity among crypto collectives: It actually sought out regulation, not only registering as a decentralized autonomous organization, or DAO, under Wyoming law but also seeking approval from the U.S. Securities and Exchange Commission for the tokens it planned to offer to prospective members.

The DAO’s reward? On Friday, the SEC announced its second administrative proceeding against American CryptoFed, accusing the DAO of filing a misleading registration form for a proposed public offering of its tokens under the Securities Act and of refusing to cooperate with the SEC’s investigation of the offering materials.

Fifth Circuit Declines to Rehear Sweeping Decision That Hamstrings SEC’s Enforcement Program

The Fifth Circuit denied the SEC’s en banc petition on October 21, 2022, leaving a certiorari petition as the only remaining avenue for the SEC to challenge a decision that threatens several important aspects of its enforcement powers. As the judges dissenting from denial of en banc review recognized, the decision “raises questions of exceptional importance.” If left standing, Jarkesy potentially could cripple the ability of the Commission to hold gatekeepers and supervisors responsible for negligent oversight of those who commit fraud, opens the door to constitutional challenges to some SEC actions filed in federal court, and raises questions about the appropriateness of administrative settlements that the SEC continues to ink every day.

Sam Bankman-Fried ran FTX like ‘personal fiefdom’ as firm spent $300M on luxury real estate

Sam Bankman-Fried treated FTX like a “personal fiefdom,” as he and a handful of associates looted the now-defunct crypto exchange’s coffers to fund an epic spending spree that included a $300 million splurge on Bahamas real estate, lawyers for the company claimed.

FTX’s bankruptcy team detailed the wild spending under 30-year-old Bankman-Fried in a closely watched court hearing on Tuesday — revealing rampant mismanagement by top executives until the platform collapsed with more than $1 billion in client funds missing.

Attorneys said the $300 million spent on real estate was mostly used to buy mansions and beachfront vacation properties for Bankman-Fried and other senior FTX executives.