A growing urgency in Washington to address the threats posed by cryptocurrencies has accelerated the pace of an aggressive government crackdown in recent days, a likely prelude to a lengthy period of legal wrangling over the experimental technology that enables new forms of financial speculation, the New York Times reports. Last week, two high-profile crypto firms — including a popular exchange where people buy and sell digital coins — came under intense pressure from state and federal regulators. After announcing a settlement with the exchange, the S.E.C. also fined a crypto promoter and sued a start-up that issued digital coins, for a total of three enforcements in just over a week. “I’ve been referring to it as the crypto carpet bombing,” said Kristin Smith, the executive director of the Blockchain Association, a crypto industry trade group. “Every couple hours we hear of some new enforcement action.”
For years, regulators were criticized for failing to come to grips with the crypto industry, even as it grew into a multitrillion-dollar business. In November, the FTX crypto exchange, once regarded as one of the most reliable firms in the freewheeling industry, failed practically overnight, and its founder, Sam Bankman-Fried, was charged with orchestrating a yearslong fraud. That put regulators under intense pressure to act. After FTX filed for bankruptcy in November, the S.E.C., the Justice Department and the Commodity Futures Trading Commission, another regulator, all brought cases against Bankman-Fried and two of his top lieutenants. The activity against the broader industry picked up last month when the S.E.C. fined the crypto lender Nexo $45 million and charged one of its competitors, Genesis, with offering unregistered securities. The enforcement wave has caused outrage and anxiety in the crypto industry. Some industry advocates have labeled the government efforts “Operation Choke Point 2.0,” alluding to a law enforcement campaign in the 2010s to prevent banks from working with certain businesses.