Trump’s SEC chair Paul Atkins blamed US government for FTX collapse

Paul Atkins, Donald Trump’s choice to lead the Securities and Exchange Commission (SEC), wasted no time blaming the US government for the implosion of Sam “SBF” Bankman-Fried’s crypto empire, FTX.

Atkins, a seasoned SEC veteran and proud crypto advocate, said the US regulatory environment failed to accommodate blockchain, contributing to one of the most infamous crashes in financial history.

Atkins didn’t deny SBF’s fraudulent behavior but argued that the government shares some of the responsibility. Speaking on a podcast, he said, “The collapse of FTX was this international debacle that happened because, I think, the U.S. didn’t make our rules accommodating to this new technology.”

Paul Atkins had a front-row seat to the FTX disaster

Atkins’ consulting firm, Patomak Global Partners, had direct ties to the defunct exchange. Court filings show that Patomak was listed as a creditor in FTX’s bankruptcy, tied to a board advisory agreement signed in January 2022, just ten months before the collapse.

The company also served as a lobbyist for FTX. Despite his connections to the failed exchange, the SEC chair has doubled down on his criticism of the US government’s regulatory approach. He pointed out that unclear and overly restrictive rules forced major players like Binance, the world’s largest crypto exchange, to operate overseas.

Binance had to pay $4 billion in penalties to settle US allegations of violating money-laundering laws and sanctions last year.

“Binance is mainly overseas because they cannot comply with the regulations as written by the SEC and still operate with these decentralized distributed ledger-type assets,” Atkins said.

Atkins isn’t just pointing fingers, though; he’s also proposing solutions. He’s endorsed SEC Commissioner Hester Peirce’s Token Safe Harbor Act, which would give blockchain developers a grace period to build decentralized networks before facing federal securities laws.

Peirce, a longtime ally of Atkins, publicly praised his nomination, calling him the “ideal choice” to lead the SEC.

A crypto-friendly administration

Once skeptical of digital currencies, Trump has vowed to champion the crypto industry, a sharp contrast to the Biden administration’s hardline crackdown. With Atkins in charge, the SEC will take a more lenient approach to crypto regulation. Hours after the announcement of his nomination, Bitcoin surged past $100,000 for the first time ever.

However, not everyone is thrilled. Critics argue that Atkins’ pro-crypto stance could embolden bad actors. Many anticipate fewer enforcement actions against crypto companies, though ongoing cases against Coinbase and Kraken may still proceed.

John Reed Stark, a former SEC enforcement chief, said Atkins would likely “review a spreadsheet of all active litigation” and decide which cases to dismiss, settle, or push forward.

Atkins’ critics argue that this could set a dangerous precedent. By easing regulatory pressure, they fear the SEC could lose its grip on an industry notorious for volatility and fraud.

On the other hand, Atkins’ supporters, including Richard Breeden, a former SEC chair who worked with Atkins in the 1990s, see him as a fair and balanced regulator. “If I were in the crypto industry, I’d be thrilled to have someone with his knowledge in charge,” Breeden said.