No Easy Street for Crypto, Warns CFTC’s Pham

She explained that regulators will continue to pursue fraud, deception, and theft aggressively, even in a more growth-friendly environment. Pham also criticized the Biden-era approach of ”regulation by enforcement” and argued that it harmed broader financial markets. She reiterated her belief in integrating crypto into everyday life, similar to how Uber transformed transportation. Pham also announced her upcoming departure, with a16z’s Brian Quintenz expected to succeed her, pending Senate approval. However, Quintenz faced criticism during his nomination hearing for evading questions about maintaining political balance at the CFTC. Meanwhile, a Massachusetts court ordered nearly $26 million in penalties against My Big Coin operators for running a fraudulent crypto scheme. Pro Crypto Does Not Mean Pro Crime… At the Coinbase Annual Summit, Commodity Futures Trading Commission (CFTC) acting chair Caroline Pham said that the Trump administration’s friendlier stance toward crypto does not equate to leniency from regulators. In a candid conversation with Yahoo Finance , Pham stated, “There is no easy street for anybody, and regulators aren’t easy.” She warned that even in a pro-growth environment, illegal activity like fraud, deception, and theft will not be tolerated. (Source: Yahoo Finance ) Pham also explained that she is satisfied that the CFTC shifted away from what she described as the Biden administration’s approach of “regulation by enforcement,” which allows the agency to instead focus on rooting out fraudsters in the market. She criticized the Biden-era policies for overreaching and said they had unintended consequences on financial markets, including traditional derivatives and forex. Pham suggested that the previous administration’s attempts to stretch legal definitions in order to target crypto disrupted the foundational rules of global markets. Sha also shared some comments on her previous analogy of “uberizing crypto.” Pham explained that the idea involves making digital assets so integrated into everyday life that removing or criminalizing them becomes politically untenable. Just as ride-sharing disrupted and ultimately became embedded in the transportation sector, Pham also sees a future where crypto becomes too mainstream to be dismantled. Her remarks came shortly after the House Financial Services Committee advanced the CLARITY Act, which is a market structure bill that seeks to resolve the long-standing regulatory tug-of-war between the CFTC and the SEC by assigning very clearer authority over digital assets. Doing this will very likely give more oversight power to the CFTC. Pham concluded her talk by announcing her plan to leave the agency and make way for Brian Quintez, the current policy head at a16z Crypto, who is expected to assume the chair pending Senate approval. Senators Press Quintenz on CFTC Political Balance During a Senate nomination hearing on Tuesday, Brian Quintenz, President Donald Trump’s nominee to chair the CFTC, declined to confirm whether he supports maintaining a bipartisan balance at the agency. When he was pressed by Senators Tina Smith and Raphael Warnock, Quintenz sidestepped the question by focusing instead on his prior experience as a CFTC commissioner and his time at venture capital firm Andreessen Horowitz. Senator Smith called his response “disappointing,” as she is concerned about the potential for a politically unbalanced CFTC leadership. Brian Quintenz speaking during his nomination hearing The law mandates that no more than three CFTC commissioners may belong to the same political party. At the time of the hearing, only two commissioners were actually active — acting chair Caroline Pham and Kristin Johnson — both of whom are expected to leave if Quintenz is confirmed. It is still unclear whether Quintenz has enough Senate support for his nomination to proceed. As one of the primary US financial regulators, the CFTC is poised to play a massive role in overseeing digital assets, particularly as Congress is considering legislation like the CLARITY Act to establish a more defined crypto market structure. Quintenz stated that the agency will require more resources and staffing if it is given broader authority over digital assets. He also supports the CFTC taking on a larger regulatory role under a clear legislative framework. In addition to his views on regulation, Quintenz discussed the challenges of banking access faced by crypto startups, and mentioned that his venture firm at Andreessen Horowitz struggled to fund small crypto teams due to debanking issues. Part of a letter from Brian Quintenz (Source: US Office of Government Ethics ) Additionally, Quintenz acknowledged his current financial ties to crypto and market firms, which could present conflicts of interest. He pledged to resign from all related positions and divest from specific assets within 90 days if confirmed. Overall, his statements mainly echoed his prepared testimony and aligned with expanding the CFTC’s authority over the crypto sector, though his nomination process remains uncertain because of lingering concerns over political balance and financial entanglements. CFTC Cracks Down on My Big Coin Fraud In other CFTC-related news, a Massachusetts federal court issued a default judgment against the alleged operators of My Big Coin (MBC), ordering them to pay approximately $25.8 million in penalties and restitution in connection with a fraudulent crypto scheme. The CFTC announced the ruling on Wednesday, and stated that My Big Coin Pay, Inc., My Big Coin, Inc., and their executives, Mark Gillespie and John Roche, were found liable for defrauding investors through a digital currency scam that operated between 2014 and 2017. The court ordered the defendants to pay $19.32 million in civil monetary penalties, as well as $6.44 million in restitution to the 28 investors they allegedly defrauded. Gillespie and Roche, along with their associated companies, were also permanently banned from participating in markets under CFTC oversight or engaging in any CFTC-regulated activities. According to the CFTC, the My Big Coin scheme relied on deceptive marketing practices to solicit funds from unsuspecting investors. The defendants made numerous false claims about the cryptocurrency’s value, use cases, and tradability. They also misled investors by saying that MBC was backed by gold, which was not true. These fraudulent claims helped the group raise over $6 million from investors across the United States. The CFTC explained that while the judgment secures financial penalties and investor restitution, there is no guarantee that victims will be able to recover their funds. The agency warned that the defendants may lack sufficient assets to cover the full amount of restitution. Another individual that was involved in the scheme, Randall Crater, was previously convicted on multiple charges, including wire fraud and operating an unlicensed money-transmitting business. Crater was sentenced in early 2023 to more than eight years in prison and ordered to repay $7.6 million to investors. His appeal for a new trial was denied in February of 2024. The court dropped its case against one alleged participant, Michael Kruger, due to his death.

Source: Coinpaper