The Consumer Financial Protection Bureau has an aggressive new leader, one more in line with the woman who should have been its first than with its most recent occupants. The Office of Comptroller of the Currency is (or is not) getting one in a similar mold. Over at the Securities and Exchange Commission, Gary Gensler is working eight days a week to make the lives of those on Wall Street and in cryptoland miserable. And if the aforementioned woman gets her way, someone more like-minded will soon be manning the reins at the Federal Reserve.
But what of the fifth pillar of the finance services regulatory regime? No, we’re not talking about Gensler’s old haunt, the Commodity Futures Trading Commission. No one takes that seriously, least of all President Biden. We’re talking about the Justice Department. After four years of taking matters white collar (among others) as unseriously as everyone now takes the CFTC, when would Merrick Garland, who after all has been in his job of Attorney General longer than any of the previously-mentioned regulators—although he arguably inherited by far the largest mess to clean up—finally get in on the party?
Lisa Miller will serve as acting deputy assistant attorney general for the criminal division, overseeing the fraud and appellate sections, a Justice Department spokesman said. Ms. Miller replaces Daniel Kahn, who left the department Wednesday to join the law firm Davis Polk & Wardwell LLP.
The Justice Department also has appointed two deputy chiefs within its fraud section, according to an internal Justice Department announcement viewed by The Wall Street Journal. The section, one of the largest teams of white-collar criminal prosecutors in the U.S., investigates business crimes ranging from foreign bribery to healthcare and securities fraud and market manipulation…. The appointments follow the Senate confirmation in July of Kenneth Polite Jr., who was nominated by the Biden administration to serve as assistant attorney general of the Justice Department’s criminal division.
The creation of the National Cryptocurrency Enforcement Team, which would be under the supervision of Assistant Attorney General Kenneth Polite Jr., will focus on crimes committed by virtual currency exchanges and mixing and tumbling services, the DOJ said in a statement. The team also would help trace and recover assets lost to fraud and extortion, the DOJ said…. NCET would strengthen DOJ’s capacity “to dismantle the financial entities that enable criminal actors to flourish—and quite frankly to profit—from abusing cryptocurrency platforms,” [Deputy Attorney General Lisa] Monaco said. “As the technology advances, so too must the department evolve with it so that we’re poised to root out abuse on these platforms and ensure user confidence in these systems,” she said.
John Carlin, a senior member of the deputy attorney general’s office, in a speech on Tuesday to an audience of white-collar defense lawyers, acknowledged the Justice Department’s efforts to combat white-collar crime had fluctuated over the years. He added that the agency would “redouble” its commitment to white-collar crime enforcement under the Biden administration…. Mr. Carlin described several initiatives to boost white-collar enforcement, which he said he was previewing for the first time, including one that will embed Federal Bureau of Investigation agents within a component of the Justice Department that investigates foreign bribery, market manipulation and healthcare fraud cases. The addition of new resources to the prosecution of white-collar crime already has begun, he said.
The Justice Department is poised to sue government contractors and other companies who receive U.S. government grants if they fail to report breaches of their computer systems or misrepresent their cybersecurity practices, the department’s No. 2 official said Wednesday…. “For too long, companies have chosen silence under the mistaken belief that it’s less risky to hide a breach than to bring it forward and to report it. Well, that changes today,” Monaco said.
And before Garland or Gensler up and decide such matters are illegal in some way, companies across the business landscape would like the friendly folks at the Financial Accounting Standards Board to do so. Quickly, if possible.
Businesses such as telecommunications firm Charter Communications Inc. and software firm Autodesk Inc. are urging the FASB to pursue rule making on a range of accounting issues. These include digital assets such as bitcoin and energy transactions—for example, renewable-energy certificates and carbon-offset credits, which companies can purchase and apply toward their greenhouse gas emissions-reduction targets.
In both cases, there are currently no specific accounting rules for companies to follow.
Exactly how Tether is backed, or if it’s truly backed at all, has always been a mystery. For years a persistent group of critics has argued that, despite the company’s assurances, Tether Holdings doesn’t have enough assets to maintain the 1-to-1 exchange rate, meaning its coin is essentially a fraud…. So earlier this year I set out to solve the mystery. The money trail led from Taiwan to Puerto Rico, the French Riviera, mainland China, and the Bahamas. One of Tether’s former bankers told me that its top executive had been putting its reserves at risk by investing them to earn potentially hundreds of millions of dollars of profit for himself. “It’s not a stablecoin, it’s a high-risk offshore hedge fund,” said John Betts, who ran a bank in Puerto Rico Tether used. “Even their own banking partners don’t know the extent of their holdings, or if they exist.”
The family office owns “some coins … but not a lot,” Dawn Fitzpatrick, CEO and chief investment officer of Soros Fund Management, said…. “I’m not sure bitcoin is only viewed as an inflation hedge here,” Fitzpatrick said. “I think it’s crossed the chasm to mainstream.”
Starting Thursday, Public.com will begin gradually launching the offering to most users, who will be able to buy, sell and hold 10 cryptocurrencies, including bitcoin, ether, joke cryptocurrency dogecoin and Cardano’s ada token…. Cryptocurrencies have “really attracted a new generation of investors to it as an asset class,” Stephen Sikes, chief operating officer of Public.com, said. “We also think…there is some validity to including crypto within a broadly diversified portfolio.”
Justice Department Sets Up National Cryptocurrency Enforcement Team [WSJ]
Justice Department to Redouble Efforts in Combating White-Collar Crime, Official Says [WSJ]
US poised to sue contractors who don’t report cyber breaches [AP]
Justice Department Firms Up Criminal Division Leadership Ranks [WSJ]
Companies Want FASB to Focus on Crypto, ESG-Related Rule Making [WSJ]
SEC’s Gensler Aims to Save Investors Money by Squeezing Wall Street [WSJ]
SEC head Gary Gensler under fire over crypto regulation [FT]
Sen. Elizabeth Warren Says Fed Suffers From ‘Culture of Corruption’ [WSJ]
Anyone Seen Tether’s Billions? [Businessweek]
George Soros’ fund owns bitcoin, CEO confirms [CNBC]
Investing Platform Public.com Launches Crypto Trading [WSJ]
Hedge fund legend David Einhorn warns investors aren't doing their homework, predicts stubborn inflation, and says crypto is too complex for him in a new interview. Here are the 10 best quotes. [BI]
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