[Congressional Record Volume 168, Number 184 (Wednesday, November 30, 2022)]
[Senate]
[Pages S6875-S6876]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                             Cryptocurrency

  Mr. DURBIN. Mr. President, while the Members of the Senate were 
enjoying Thanksgiving, thousands of hard-working Americans were 
navigating the wreckage of a financial shipwreck. I am referring to the 
collapse of the cryptocurrency exchange known as FTX.
  While I am sure that many have heard about FTX's implosion and the 
resignation of its CEO, Sam Bankman-Fried, there is one part of the 
story you may have missed.
  In the moments after the FTX platform collapsed, one of the first 
steps the company took was to freeze user accounts. That means before 
many users even knew what was happening, they were denied access to any 
funds remaining, and as a result their investments may have gone down 
with the ship.
  Think of it like this: You show up at your bank--the same bank that 
happily accepted your money week after week--but this time the door is 
locked and the lights are off. All the tellers have gone home. The 
security guard is turning you away at the door. And as for your money, 
well, it just disappeared. But when you ask to see the books of this 
depository to figure out what happened, you come to learn that they 
don't have any books.
  That is exactly what happened to FTX crypto users like Nick Howard, 
who shared his story with America on National Public Radio.
  When Nick first opened his account with FTX, he says he had no 
intention of making any speculative or risky investment. In fact, he 
was using the platform to store his paychecks from his employer, which 
had chosen to pay him through cryptocurrency known as Tether.
  Tether is one of the so-called stablecoins. It was designed to offer 
greater security and stability than other cryptocurrencies like Bitcoin 
by being paid to the value of the dollar. Well, as Nick learned the 
hard way, there is no such thing as stability when it comes to 
cryptocurrency.
  When Nick Howard first signed up for FTX, his employer assured him 
the platform was ``really good . . . really stable.'' So he took his 
employer's word for it as well as the word of public figures and 
advisers, well-respected names like Larry David and Tom Brady, who had 
appeared on television in ads for FTX.
  Nick had $16,000 worth of paychecks deposited into his FTX account by 
the time the platform imploded. Nick is a young fellow. He says he 
doesn't have a lot of savings, but that $16,000 represented half of all 
that he had accumulated in his life. So when Nick found out that he had 
little or no hope of retrieving his money, he told National Public 
Radio that ``I feel like I am in the middle of . . . a trauma 
response.''
  Who can blame him?
  In the past few years, platforms like FTX have spent billions of 
dollars to try to create a veneer of credibility for an industry fueled 
by greed and many times deception.
  These slick ad campaigns have been designed to distract American 
people from the fact that cryptocurrency is extremely volatile and 
barely regulated. Sadly, these ad campaigns worked their will on one in 
five Americans, who say they either invested in or traded crypto. All 
of them are at risk.
  It was just a few months ago that I stood on the same Senate floor 
and expressed my concern about the dangers of cryptocurrency on 
platforms like FTX. Well, in the 3 weeks since I last spoke on the 
floor, billions of dollars have disappeared in a black hole of 
financial collapse. Hard-working Americans who are already being 
squeezed by inflation are paying an even higher price. And, today, Sam 
Bankman-Fried is exhibit A in the story of the crypto crash. His 
personal plunge from billionaire to bankrupt has been well documented.
  In some ways, this is not a new story. The alleged fraud by Mr. 
Bankman-Fried is nothing more than a 21st-century Ponzi scheme. As CEO 
of FTX, Mr. Bankman-Fried secretly siphoned $10 billion from the 
platform--$10 billion that belonged to investors like Nick Howard. What 
did Mr. Bankman-Fried do with the $10 billion? He transformed it into 
assets of his own personal hedge fund called Alameda.
  Let me say that another way: Sam Bankman-Fried transferred $10 
billion from his platform's users in order to fund his own risky bets. 
And days before FTX imploded--just hours before--he had the nerve to 
tweet out:

       FTX is fine. Assets are fine.

  He even tweeted:

       We don't invest client assets.

  All lies. That was a brazen, bald-faced attempt from the CEO of what 
claimed to be the most reliable crypto trading platform in the world. 
It is the same shady tactics we have seen before when Bernie Madoff was 
caught with his hand in the till more than a decade ago, but there is 
one key difference. Crypto speculators and scam artists like Sam 
Bankman-Fried pride themselves on being disrupters. They claim they are 
sticking it to the old, traditional finance and the big banks, giving 
the little guy the power of financial freedom.
  I know the Presiding Officer is a music fan and he remembers the 
lyrics of the old song ``freedom's just another word for nothing left 
to lose.'' Well, FTX has taught investors like Nick Howard that they 
have everything to lose. That is the truth. The myth of crypto is a 
ruse, one that is designed to dupe hard-working Americans like Nick 
Howard into forking over their life savings to companies like FTX.
  And in the case of Sam Bankman-Fried, he burned tens of millions of 
dollars trying to brand himself as a noble, altruistic philanthropist. 
Mr. Bankman-Fried even plastered an image of himself on the walls of 
Union Station. That is less than a mile away from where we are meeting 
on Capitol Hill. It was a big ad and a big photo, according to the 
Washington Post, and it said: I'm in on crypto to make a global impact 
for good.
  My, my, my. Well, it is hard to see anything good about defrauding 
your own investors or scamming working Americans out of their life 
savings. And it goes without saying, there is nothing good about 
leading an industry that produces three times as much pollution as all 
of America's largest coal plants did in the year 2021.
  So this is my advice to the American people when it comes to the 
crypto world: Don't be fooled. Crypto speculators like Sam Bankman-
Fried, who became one of the youngest billionaires in the world and 
lives in a guarded compound in the Bahamas, really don't have your best 
interests at heart. They are trying to catfish you into their grift. 
And the moment you take the bait, they will take your money and run.
  Whatever credibility the crypto industry once had has been challenged 
by the collapse of FTX. So it is time for wiser minds, more careful 
thinking in the financial world to cash out of the crypto casino.
  Let's start with Fidelity. What do I mean by that? Well, over the 
summer, Fidelity, one of the largest and most respected names in 
investment houses, one of the largest 401(k) providers in the world, 
announced that it would

[[Page S6876]]

allow plan sponsors to offer plan participants exposure to Bitcoin. 
Bitcoin embodies the volatility of the entire crypto industry. Its 
value has dropped like a rock in under a year.
  I know the stock market has suffered, too, but listen to this: The 
cost of one Bitcoin fell from nearly $69,000 in 2021 to roughly $16,000 
today, a more than 70 percent loss in value in 1 year. Now imagine that 
the value of your 401(k) account was dependent on the health of 
Bitcoin, as Fidelity suggests you might do. The value of that is in 
freefall.
  There are more than 32 million Americans that invest with Fidelity, 
and many of them are relying on their 401(k)s 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.
  Last July, as a customer of Fidelity, I sent a letter to the CEO, who 
I don't know personally, and I raised concerns about the potential risk 
and financial dangers associated with investing in digital assets. Last 
week, I turned around and sent a second letter--it seems she missed the 
first one--urging Fidelity to reconsider its decision.
  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 this kind of volatility, particularly in long-term 
and retirement accounts. Let's learn from the losses of retail 
investors like Nick Howard. The American people desperately need 
better.
  And I would just say that I have been a crypto skeptic from the 
start; and, sadly, the evidence that is being presented to me suggests 
that my concerns were not misplaced. We have an obligation to protect 
the American public. At this stage, the best I can do is come to the 
Senate floor, send out letters, send out press releases, and warn 
people.
  What we should do is to regulate this industry in a way to protect 
the American public. We have done it over and over again throughout our 
history, many times after American families and investors have been 
burned badly.
  Well, FTX is living proof that we need to do it again and do it 
quickly. I don't know what the prospects of passing that kind of 
legislation are in a divided Congress in the next few weeks, but I can 
tell Americans across the board: Think twice before you sign up for the 
crypto craze.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.