FTX’s Fall Might Hurt CEO’s Crypto Regulation Lobby

The mid-term election in the US is playing a role in influencing and reshaping the regulatory landscape of the crypto industry amid the turmoil brought about by the collapse of the crypto exchange FTX.

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With a clearer outcome for the result of the midterm election in the U.S., some analysts predict Republicans could reseize the control of Congress. The shift of balance of power and dynamic discourse in power might affect the ongoing regulation of cryptocurrency and virtual assets. 

Throughout the election campaign, many leaders and enterprises in the crypto industry try to expand their influence and abilities to lobby legislators by offering political donations to their candidates in favour.

Per Reuters, citing data from OpenSecrects, the report disclosed that FTX’s CEO Sam Bankman-Fried, also known as SBF, is heavily involved in this mid-term election and has donated far more than others in the crypto industry.

Data shows that Bankman-Fried’s total contribution of approximately $40 million makes him the sixth-largest individual donor in the United States. The vast majority of his donations go to Democrats, while less than 0.6% of the funding is in support of Republicans, according to OpenSecrets.

Meanwhile, SBF’s deputy- Ryan Salame, Co-CEO of FTX Digital Markets, provided over $23.6 million to Republicans, including over $11,000 supporting Rep. Alex Monnet of West Virginia. Salame’s total contribution pushed him to the 14th biggest individual donor on the list.

However, SBF’s commitments have been questioned alongside the latest gridlock of the FTX. 

The mid-term result comes amid the oscillation of the markets after the collapse of the SBF’s crypto exchange FTX, as Changpeng Zhao announced Binance would acquire FTX under a non-binding letter of intent. Despite the terms of the deal were not disclosed or neither was a timeline for when the deal might close, the market has experienced a new wave of turmoil and volatility amid the crypto winter.

Crypto Bill Regulation Remains Unclear

Part of analysts suggests a Republican-dominated Congress would likely put pressure on agencies, such as the Securities and Exchange Commission (SEC), which the industry has charged with regulating through enforcement, to ease their aggressive posture against crypto firms.

In June, a bipartisan pair of U.S. senators unveiled a bill that would establish new legal frameworks for cryptocurrency and hand the bulk of their oversight to the Commodity Futures Trading Commission (CFTC).

The so-called “Crypto Bill” debate is still ongoing in Congress. The bill, if approved, might empower the CFTC, which considers a more crypto-friendly regulator than the SEC, to oversee the crypto market.

Among controversial issues in regulating crypto, one of the struggles would be the definition of “security”, which financial products count as security or commodities. Who has the authority, and how to regulate it? All these questions remain unclear. 

Previously, CFTC Chair suggested that it should let Congress regulate crypto, which is much better than the gridlock remaining between CFTC and SEC.

Meanwhile, serval legal battles between SEC and virtual assets companies, such as Ripple, are still struggling to seek an end game. In December 2020, the SEC sued Ripple Labs, alleging that the crypto firm had raised over $1.3 billion by selling XRP in unregistered securities transactions. But Ripple maintained that XRP sales and trading did not meet the Howey Test, a test created by the Supreme Court to determine whether a transaction qualifies as a security.

Image source: Shutterstock

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FTX ‘s Collapse Might Fail SBF to Lobby Crypto Regulation

Meanwhile, the mid-term election in the US is also influencing and reshaping the regulatory landscape in terms of cryptocurrency amid the turmoil of the collapse of FTX in the crypto market. 

congress_1200.jpg

With a clearer outcome for the result of the midterm election in the U.S., some analyses predict Republicans could reseize the control of Congress. The shift of balance of power and dynamic discourse power might affect the ongoing regulation of cryptocurrency and virtual assets. 

Throughout the election campaign, many leaders and enterprises in the crypto industry try to expand their influence and abilities to lobby legislators by offering political donations to their candidates in favour.

Per Reuters, citing data from OpenSecrects, the report disclosed that FTX’s CEO Sam Bankman-Fried, known as SBF, has donated far more than others in the crypto industry, who is heavily involved in this mid-term election.  

Data shows that Bankman-Fried’s total contribution of approximately $40 million makes him the sixth-largest individual donor in the States. The vast majority of his donations go to Democrats, while merely less than 0.6% of the funding is in support of Republicans, according to OpenSecrets.

Meanwhile, SBF’s deputy- Ryan Salame, Co-CEO of FTX Digital Markets, provided over $23.6 million to Republicans, including over $11,000 supporting Rep. Alex Monnet of West Virginia. Salame’s total contribution pushed him to the 14th biggest individual donor on the list.

However, SBF’s commitments have been questioned alongside the latest gridlock of the FTX. 

The mid-term result comes amid the oscillation of the markets after the collapse of the SBF’s crypto exchange FTX, as Changpeng Zhao announced Binance would acquire FTX under a non-binding letter of intent. Despite the terms of the deal were not disclosed or neither was a timeline for when the deal might close, the market has experienced a new wave of turmoil and volatility amid the crypto winter.

Crypto Bill Regulation Remains Unclear

Part of analysts suggests a Republican-dominated Congress would likely put pressure on agencies, such as the Securities and Exchange Commission (SEC), which the industry has charged with regulating through enforcement, to ease their aggressive posture against crypto firms.

In June, a bipartisan pair of U.S. senators unveiled a bill that would establish new legal frameworks for cryptocurrency and hand the bulk of their oversight to the Commodity Futures Trading Commission (CFTC).

The so-called “Crypto Bill” debate is still ongoing in Congress. The bill, if approved, might empower the CFTC, which considers a more crypto-friendly regulator than the SEC, to oversee the crypto market.

Among controversial issues in regulating crypto, one of the struggles would be the definition of “security”, which financial products count as security or commodities. Who has the authority, and how to regulate it? All these questions remain unclear. 

Previously, CFTC Chair suggested that should let Congress regulate crypto, which is much better than the gridlock remaining between CFTC and SEC.

Meanwhile, serval legal battles between SEC and virtual assets companies, such as Ripple, are still struggling to seek an end game. In December 2020, the SEC sued Ripple Labs, alleging that the crypto firm had raised over $1.3 billion by selling XRP in unregistered securities transactions. But Ripple maintained that XRP sales and trading did not meet the Howey Test, a test created by the Supreme Court to determine whether a transaction qualifies as a security.

Image source: Shutterstock

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South Korea’s Presidential Nominee to Raise Campaign Funds by Using NFT

The campaign office of Lee Jae-myung, a South Korean presidential nominee of the ruling Democratic Party of Korea, has announced the plans to raise funds through a blockchain-based digital platform with plans to issue a Non-Fungible Token (NFT) to donors afterwards.

As reported by the Yonhap News Agency, the move is targeted at young millennials, especially those tilted towards cryptocurrencies.

Per the reports, the ruling Democratic Party’s campaign committee for Jae-myung said it expects NFTs to serve as a new medium for messages to voters and bring political memorabilia to a new generation of digital natives. The move to issue the NFTs to voters will cap the party’s efforts to accept cryptocurrency donations and prove to voters that it believes in the future of the technology.

“As the young generation in their 20s and 30s are interested in emerging technologies, including virtual assets, NFTs and the metaverse, this type of fundraising could appeal to them,” Kim Nam-kook, a campaign committee official, told Yonhap News.

The proposed NFTs are billed to have inherent financial value over time, serving as another factor that can inspire voters into taking advantage of the opportunity to donate to the campaign. Beyond Jae-myung, other South Korean politicians have also expressed willingness to accept crypto donations. One of these includes Rep member Lee Kwang-jae, who said his campaign office is all geared to begin receiving crypto donations by mid-January. 

“It is high time that we undertake innovative experiments to enhance our understanding of these future technologies and change perceptions of digital currencies and NFTs,” said Lee.

South Korea has seen a good growth of digital currencies over the past few years, which seems to have been somewhat stumped by regulations. Unregistered exchanges are no longer operating in South Korea after regulators declared those unable to ink partnership with a local bank unfit to offer crypto services in the nation. 

Beyond local exchanges, prominent trading platforms such as Huobi and OKEx have also moved their businesses away from South Korea on regulatory grounds.

Image source: Bloomberg.com

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Could blockchain end bitter vote-rigging disputes once and for all?

From the United States to Uganda, allegations of vote rigging have become part and parcel of elections worldwide.

Some of these claims are legitimate, with strongmen leaders suppressing the will of the people in a desperate attempt to cling on to power. But in other cases, such accusations are made with little evidence. Fake videos swirl online that paint a picture of manipulation on an industrial scale — depicting a world where ballot papers are dumped in bins.

Whether true or false, even the mere suggestion of vote rigging is enough to undermine confidence in the democratic process — dividing communities and triggering violence, as we saw at the U.S. Capitol back in January. A recent poll performed by Morning Consult and Politico suggested that just 33% of Republican voters now trust U.S. elections.

In this age of uncertainty, talk has inevitably turned to how blockchain can help modernize elections — amid hopes that this technology can deliver a sense of finality to proceedings. Proponents also believe these immutable databases could also enable national votes to be run far more efficiently. We often take elections for granted, yet forget about the sheer manpower and organization that’s required to ensure tens of millions of people can vote on the same day.

But it isn’t enough to just say the word “blockchain” and trust that the pain points in global elections can be resolved. Instead, a great deal of thought is required to determine how this technology should be applied. Should voters be casting their ballots electronically, meaning their choice is automatically recorded on one of these networks, or should the technology be brought in when results are being validated?

A flurry of blockchain-based voting systems have emerged in recent years — including the likes of Votem, Voatz and Horizon State. Some have struggled to achieve adoption, while security vulnerabilities have been uncovered in others.

Blockchain ballots

When it comes to the prospect of voting on the blockchain itself, some academics have expressed fears that this technology might not be the silver bullet people are hoping for. A November 2020 paper from the Massachusetts Institute of Technology warned claims that blockchain would increase election security are “wanting and misleading.”

The four co-authors cast doubt on whether voting from a computer or smartphone would make the process more convenient and accessible for the public — with some studies suggesting that it might have “little to no effect on turnout in practice.” They also argued that malware and denial-of-service attacks could undermine a person’s ability to cast their ballot. Paper and a pen may be old fashioned, but at least it can’t be commandeered by a hacker.

“Online voting systems are vulnerable to serious failures: Attacks that are larger scale, harder to detect, and easier to execute than analogous attacks against paper-ballot-based voting systems. Furthermore, online voting systems will suffer from such vulnerabilities for the foreseeable future given the state of computer security and the high stakes in political elections,” they wrote.

Even if blockchain technology was rolled out nationwide in a major vote, polling places would still need to be dotted across the country to cater to those who don’t have the technology or knowhow to cast their ballot digitally.

However, such criticism doesn’t necessarily mean that blockchain should be written off altogether — and that these cutting-edge networks have no place in the electoral system.

Counting on blockchain

Free TON is one community that has been looking into this issue in greater depth — and rather than devising a system to ensure blockchain is used during voting, it is working to create software that delivers value after voting.

In November 2020, a contest was held to produce the specifications for software that would pave the way for votes to be audited in a crowdsourced, tamperproof fashion. Crucially, this technology would enable anyone to verify the counts of existing election authorities — helping to boost confidence in the final results.

Luca Patrick, who ended up winning the contest, created specifications for software that is tailored toward Latin American countries such as Guatemala, where vote rigging claims have gone hand in hand with political instability. He received 30,000 TON Crystals for his contribution.

“The election process is such an obvious problem in so many countries. I’ve been thinking of solutions and their different applications for a few years now. When I saw that I could actually put some of them into action through Free TON, I was quite excited,” he explained.

Game mechanics are a key part of his concept, where those counting the results mine tokens which are locked up. Those who check the vote counters’ work then unlock these digital assets if the results are correct — an on-chain model that rewards honesty.

The next stage of the process will focus on bringing Luca’s concept to life — and a contest has been launched to find the team that will be responsible for development and following the specification closely.

For Carlos Toriello, a Free TON jury member who backed Luca’s winning entry, the magic of his proposal centered on how countries wouldn’t require existing voting systems to be changed — nor does it attempt to introduce electronic voting.

“There is too much waste by elections authorities that haven’t realized that blockchain can save them millions while also dramatically increasing the speed of independent audits,” he added.

Toriello has been campaigning for this sort of technology as part of a wider initiative called Fiscal Digital, following concerns of voter fraud that arose in 2019’s Guatemalan election. The group’s goal is to publish fully audited election results that are replicable before election authorities publish their own — and it has the ambition of verifying results in real time by 2023. It’s hoped that Free TON’s infrastructure will help turn this target into a reality.

He explained: “This year, Latin America will see presidential elections in Chile, Perú, Nicaragua and Honduras — while there will be legislative elections in Mexico, El Salvador and Argentina. I believe we will see much violence as a result of lack of trust in the voting systems, giving autocratic leaders the excuse they need to curtail democratic rights. Much of this could be prevented if better technology was used to enable anyone to verify election results.”

Faster results and reduced cost would be compelling reasons for countries to embrace blockchain in the vote auditing process. The fact that anyone can verify results for themselves could also help restore much-needed confidence in an election’s outcome — and in some countries, this could end up saving lives.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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@stephenarees so you are making my point, AIDS was taken seriously and doctors worked on best solutions and also realized that tyrannical measures were not needed to stop it. HIV was also NOT Politized to win an election.

@stephenarees so you are making my point, AIDS was taken seriously and doctors worked on best solutions and also realized that tyrannical measures were not needed to stop it. HIV was also NOT Politized to win an election.

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@GTO_Gangster @jimmysong The amount of different types of fraud in this election is is so bad, I’m starting to look at the brain washed who say “there was no fraud” as a bigger danger to society than those who did the fraud.

@GTO_Gangster @jimmysong The amount of different types of fraud in this election is is so bad, I’m starting to look at the brain washed who say “there was no fraud” as a bigger danger to society than those who did the fraud.

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@johnnymidlife You’re LIAR! I never said that. I’m pro-trump because he is the best president America had in my lifetime. He represents capitalism in a fight against Communism. —- But his re-election will lead to civil unrest, because most people want socialism. $BTC will rise regardless.

@johnnymidlife You’re LIAR! I never said that. I’m pro-trump because he is the best president America had in my lifetime. He represents capitalism in a fight against Communism.
—-
But his re-election will lead to civil unrest, because most people want socialism. $BTC will rise regardless.

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