Durbin Raises Concerns Over Cryptocurrency Amid FTX Collapse

WASHINGTON  U.S. Senate Majority Whip Dick Durbin (D-IL) spoke on the Senate floor highlighting the dangers of cryptocurrency, especially after the recent collapse of FTX.  Durbin began his speech by recounting the implosion and resignation of FTX’s CEO, Sam Bankman-Fried, as well as the chaos it’s created for FTX users like Nick Howard, who was scammed by the cryptocurrency exchange. 

“In the moments after the FTX platform collapsed, one of the first steps the company took was freezing its users’ accounts. That means, before many users even knew what was happening, they were denied access to their funds—and as a result, their investments may have gone down with the ship. Think of it like this:  You show up to your bank—the same bank that has happily accepted your money week after week—but this time, the door is locked and the lights are off.  All of the tellers have gone home and the security guard is turning you away from the door. And as for your money?  Well, it just disappeared… That’s exactly what happened to FTX crypto users like Nick Howard—who shared his story with NPR,” said Durbin.

“When Nick first opened his account with FTX, he says he had no intention of making any speculative or risky investments… Well, as Nick learned the hard way, there is no such thing as stability when it comes to cryptocurrency,” said Durbin. “Nick had $16,000 worth of paychecks deposited in his FTX account by the time the platform imploded.  He’s a young guy.  That $16,000 represents half of what he accumulated in his life.” 

As CEO of FTX, Mr. Sam Bankman-Fried allegedly transferred $10 billion from his platform’s users in order to fund his own risky bets. 

Durbin continued, “Crypto speculators and scam artists, like Sam Bankman-Fried, pride themselves on being disrupters.  They claim they’re sticking it to traditional finance and the big banks… and giving the little guy the power of financial freedom… The myth of crypto is a ruse—one that is designed to dupe hardworking Americans into forking over their life-savings to companies like FTX.”

Durbin, along with U.S. Senators Elizabeth Warren (D-MA) and Tina Smith (D-MN), urged Fidelity Investments to reconsider their decision to allow 401(k) plan sponsors to offer plan participants exposure to Bitcoin, a highly volatile and risky digital asset.  Fidelity is one of the largest 401(k) providers with more than 32 million Americans and 22,000 employers who trust Fidelity Investments with their workplace retirement accounts and employer-sponsored plans.  Last week’s letter followed a letter the Senators sent to Fidelity on July 26.  

“There are more than 32 million Americans that invest with Fidelity. And many of them are relying on their 401(k) to retire in dignity.  These Americans deserve better than having their financial security jeopardized by a digital asset that can lose thousands of dollars in the course of a day,” said Durbin. “My hope is that the company will do what is best for those saving for retirement and change course immediately.  At a moment when retirement security is already at risk for working families, there is no excuse for exposing them to even more volatility.  Let’s learn from the losses of retail investors like Nick Howard.  The American people desperately need better.”

Durbin concluded, “I will say, I have been a crypto skeptic from the start and sadly the evidence presented to me suggests that my concerns were not misplaced. We have an obligation to protect the American public… We should regulate this industry in a way to protect the American public. We have done it over and over again throughout our history.  FTX is living proof that we need to do it again…  I can tell Americans across the board, think twice before you sign up for the crypto craze.” 

Video of Durbin’s remarks on the Senate floor is available here.

Audio of Durbin’s remarks on the Senate floor is available here.

Footage of Durbin’s remarks on the Senate floor is available here for TV Stations.