Caitlin Long, CEO of Custodia Bank, has slammed regulators and lawmakers in Washington, D.C., for a "misguided crackdown" on the cryptocurrency industry, ignoring her warnings of a major "fraud" allegedly carried out by the now-bankrupt entity.
In a Feb. 17 blog post that shamed Washington, D.C., for shooting the messenger who warned of the collapse of cryptocurrencies, Long blasted the government’s approach to cryptocurrency regulation for failing to protect investors and alienating good players in the space: “Washington’s misguided crackdown will only push risks into the shadows, leaving regulators to play whack-a-mole as the risks continuously pop up in unexpected places.”
Long emphasized that through her digital asset custody company, she “has been pointing out the worst about cryptocurrencies while trying to build a legal, compliant alternative that relegates scams to the trash. But […] Most policymakers seem intent on stifling high-integrity innovators."
The Custodia Bank chief executive claims her efforts to work with government agencies were ultimately thrown behind her as she recounted a spate of recent negative events at her firm.
“Custodia is being attacked simultaneously by the White House, the Board of Governors of the Federal Reserve, the Kansas City Fed, and Sen. Dick Durbin (who confused our unleveraged, 100% liquid, and solvent bank with FTX in his Senate speech),” She said, adding: “Custodia tried to become federally regulated – the very result bipartisan policymakers claim to want. Yet Custodia has been denied and now disparaged for daring to come through the front door.”
Her views echo those of figures such as Coinbase CEO Brian Armstrong, who has repeatedly said that agencies such as the U.S. Securities and Exchange Commission (SEC) have been lukewarm about his company’s efforts to maintain a dialogue in good faith.
Earlier this month, Armstrong also criticized U.S. regulation for being unclear and what appeared to be an approach to “enforcement oversight” after the SEC shut down Kraken’s staking service on Feb. 9.
On Twitter, Long also said that she and many others had tried to warn Washington and "help law enforcement stop" major frauds long before several crypto companies collapsed in 2022, but to no avail. Long disclosed publicly for the first time that she had “turned over to law enforcement evidence of a possible crime” committed by an unnamed cryptocurrency company that “failed and cost millions of customers months ago.” Kraken co-founder and CEO Jesse Powell responded to Long's Twitter post and confirmed her claims, stating: "I can't tell you how frustrating it is to point out a ton of red flags and clearly illegal activity to regulators only to have them ignore it." People have been angry about the problem for many years."
