FTX

Democracies like government and markets need regulation. As James Madison said “If Men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and the next place, oblige it to control itself.”

Sam Bankman-Fried, a supposed crypto billionaire, is a product of our system, a man able to buy off regulators and lawmakers because of favorable press treatment (that he mostly paid for) and direct payments to lawmakers’ campaigns. Many are focused on his interactions with Democratic politicians missing what he gave to Republicans through dark money concealing his involvement. For those who do not know who Sam was, he was one of if not the most synonymous people with the recent crypto craze. Operating FTX, a cryptocurrency exchange involved in significant fraud. But unfortunately, he has given the best roadmap to reforming what is clearly a speculative asset without oversight and, because of that ripe for fraud and abuse.

His donations are why I have been a long-time supporter of more discourse of donors to all campaigns. Because not every person is giving to a candidate to improve governance. This corruption should spur a second attempt at passing the Disclose act and give citizens more information on their government.

Sam’s three reforms are a decent start to a framework.
* Maintaining adequate liquid resources to ensure the platform can return the customer’s assets upon request.
* Ensuring the environment where customer assets are secure in digital wallets.
*Ensuring appropriate bookkeeping or ledgers of assets and disclosures to protect against misuse or misallocation of customer assets.

Sam’s framework seems similar to the framework that we give to banks. Maybe down the road, with enough reform, it could extend to government protection of said assets. While he is not a good-faith actor, he has given a decent baseline for making crypto regulations a reality. But this debacle has not only discredited the crypto market but the government itself seeing how many lawmakers were tricked by a clear fraudster hopefully congress works to fix both through regulation, and transparency because he is not the only billionaire lobbying them.