At a House Financial Services Committee hearing on Dec. 12, John Ray, the lawyer brought in to unravel the alleged swindle of the century by cryptocurrency exchange FTX, described the apparent fraud in layman’s terms: “Really, just old fashioned embezzlement.”
And committee member Jake Auchincloss, congressman-for-life from the Fourth Congressional District, was outraged. His “patience with the crypto bulls is wearing thin,” he said. “It’s been 14 years and the American public has heard lots of promises, but it has seen lots of Ponzi schemes.”
What a difference a year makes. Just last December, Auchincloss was giving Charles Ponzi Jr. – a.k.a. FTX czar Sam Bankman-Fried – a tongue bath at a hearing on crypto safety.
Bankman-Fried had just finished telling another credulous congressman about how actively FTX monitored deposits and withdrawals – the better to respond helpfully to law enforcement inquiries about funny business – when Auchincloss weighed in. (Starts at 4:32:00 into the C-Span coverage.) He thanked Ponzi Jr. for the “thoughtfulness” of his completely sincere proposal for ensuring that stablecoin – a cryptocurrency with value actually tied to a real currency or commodity instead of just the fantasies of the marketplace – is properly managed.
“[We want to] ensure the reserves are what they say they are,” murmured Bankman-Fried.
You know, “they”…those other, sketchy crypto operators, over there someplace.
This all sounded good to Auchincloss, who tweeted a few weeks later that “the FSOC [the Treasury Department’s Financial Stability Oversight Council] should continue to monitor and report on systemic risk from stablecoins, given how fast the industry is growing, but right now [the risk is] modest [sic] and does not justify red tape that could lead to regulatory capture of crypto by banks.”
And in March, Auchincloss cemented his bona fides as a crypto industry water-carrier by co-signing a letter chastising industry bogeyman Gary Gensler, chair of the Securities and Exchange Commission, who cryptobros revile for his public skepticism about the scam they’re running. The letter called on Gensler to stop badgering crypto firms like FTX for information on their activities, citing an obscure federal regulation called the Paperwork Reduction Act.
“We understand that the fruits of these requests will help the staff assess the merits of an investigation at its earliest stage; however, pursuant to the PRA…federal agencies must be good stewards of the public’s time, and not overwhelm them with unnecessary or duplicative requests for information,” wrote Auchincloss and seven other reps, now known on Capitol Hill as “The Blockchain Eight.”
Which brings us to Dec. 13 when a WBUR interviewer asked Auchincloss what he was going to do with the thousands of dollars in campaign donations he received from Bankman-Fried and his cronies. Other politicians had been quick to return donations or give the money away to charity. “That money is out the door helping elect Democrats,” snapped Auchincloss.
Really? The federal charges against FTX include the claim that they broke campaign-finance laws by lending dough to company executives who turned it into campaign contributions. And just a few days after his WBUR interview, an Auchincloss spokesman tells MASSterList the congressman’s new, improved position is that the funds will be held until a method of restitution to the defrauded is determined.
From righteous advocate for gentler oversight of wealthy con men to groping for a face-saving exit in one short year; the many victims of the FTX debacle must be elated to see Auchincloss’s metamorphosis.
There are many definitions of the word “jake.” Here in New England it’s slang for firefighter, those brave men and women who see a threat and rush to extinguish it.
Another definition is an “immature male turkey.”
Jake Auchinchloss needs to decide which one he prefers.