Sam Bankman-Fried’s penalty has been handed down, but when will we finally crack down on crypto?  

FTX’s Sam Bankman-Fried and Binance’s Changpeng Zhao have officially joined the 2024 graduating class of corporate felons, but they surely won’t be the only crypto executives in that club. Unfortunately, without oversight, we won’t know who the other members are until after their companies similarly explode. Having closed more than 400 regulated financial institutions and filed lawsuits against hundreds of their directors and officers on behalf of the government, I am confident that SBF and CZ are only the tip of that iceberg.  

To appreciate the depths of the behavior that has occurred in the crypto industry, study the post-mortems.  

John Ray, the current CEO of FTX, recently wrote to the court with regard to SBF’s sentencing calling his arguments delusional and his contentions about how FTX failed and where the money went “categorically, callously, and demonstrably false”. Ray contends that SBF tried to camouflage what he stole under a cloak of effective altruism while stashing money in investments in Bahamian real estate, cryptocurrencies and speculative ventures. 

The charges against Zhao reveal a litany of actions carefully scripted to make money by outrunning laws and regulators. Binance intentionally evaded U.S. anti-money-laundering laws and outright encouraged customers to obscure where they were located to assist in the subterfuge. It was charged with willfully facilitating transactions with Hamas and purveyors of child sexual abuse material through a “colossal money-laundering hub.” Unlike SBF, who last week received a 25-year prison sentence, CZ still awaits sentencing. 

Centuries of experience prove that when a person or company is permitted to use other people’s money, there must be some oversight to prevent abuses.  

We have learned a lot from banks, which are now the gold standard when it comes to financial oversight. Endless laws and regulations limit who can own them, who can be an executive, and how much capital and liquidity they must maintain. Their activities must fit within a tightly defined financial spectrum determined by Washington regulators, and the activities between executives and the company are greatly limited. Regulators decide when banks can merge, pay a dividend, repurchase stock, or sell new stock. A violation of any of the thousands of rules will typically result in enforcement proceedings, civil penalties, removal of executives, criminal prosecution or ultimately, closure of the bank.  

Crypto companies also take other people’s money, but unlike banks, none of these limitations apply. There aren’t even filtering mechanisms to ensure that their executives are honest or have experience operating a financial company. Given this lack of government oversight, we shouldn’t be surprised that dishonest people gravitate to the business. But how has crypto been able to maintain such a pass from oversight?  

SBF’s $100 million in campaign contributions suggests a likely part of the answer — one that becomes much clearer when you aggregate the contributions by all tech companies. Make no mistake about it, a significant part of the blame for this horror show now belongs to Congress. It has sat on its collective hands for 15 years and done nothing to protect crypto consumers. Meanwhile, crypto has not surprisingly raced toward becoming a $10 trillion business — a little less than the size of the direct mortgage market in the United States.  

There are likely many more SBFs and CZs abusing your money, but Congress is unlikely to act and regulators unlikely to intervene until a crypto disaster imperils U.S. financial stability as subprime lending did in 2008. The chances of that disaster at this point are better than 50 percent. And such a meltdown would likely infect the global economy, given the many nations that have been even more foolish that the U.S. when it comes to embracing cryptocurrencies.  

Knowing that, perhaps this coming election, voters will hold politicians accountable for SBF, CZ, and their misplaced priorities driven by campaign cash and demand action. We can only hope. 

Thomas P. Vartanian is executive director of the Financial Technology & Cybersecurity Center, and author of “The Unhackable Internet.”