I have a theory: Regulators let the bad guys get big and blow up because it serves their agenda.
Powell proceeded to name three goals he believes regulators are trying to achieve. The first is to “destroy capital/resources in the crypto ecosystem,” he wrote. The second is to burn people, and deter adoption, he continued, adding that the third is to “give air cover to attack good actors.”
The Kraken boss asserted that for regulators: “The bad guys are actually on-side. Good guys are the enemy.” However, he stressed: “If the bad guys can run long enough without blowing up, they might just kill the good guys for you.” Noting that bad guys “can always be jailed later,” Powell warned:
Bad guys operate with huge competitive advantages. They suck up users, revenue and venture capital that would otherwise have gone to good guys.
Earlier this month, the U.S. Securities and Exchange Commission (SEC) took action against Kraken over its staking program. The crypto exchange settled with the SEC, closed down its staking program for U.S. customers, and agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties.
Powell also recently expressed his frustration regarding how regulators ignored his warning about illegal activity in the crypto space and then slapped his exchange with enforcement action. Without specifically mentioning the collapsed crypto exchange FTX.