2023 COMMENTS, CONTRIBUTIONS & CONCLUSIONS | "We Have Literally No Time Even To Be Astonished."

Editorial Image Credit: Maurice NORBERT / Shutterstock.com

In February 1990, the Czech poet, playwright, and political dissident Václav Havel spoke before a Joint Session of the US Congress.¹ Starting 1989 in prison, Havel ended the year as President of Czechoslovakia (’89-92) and he would go on to serve as the first President of the Czech Republic (‘93-03). In his address, Havel discussed what has since been called “the Velvet Revolution” that he had helped to inspire. In 1989, the totalitarian regimes that prevailed across Eastern Europe during the Cold War collapsed with an unexpected suddenness, Havel said. “The human face of the world is changing so rapidly that none of the familiar political speedometers are adequate,” he marveled. “We have literally no time even to be astonished.”

 

The last six months have felt similarly breathless, starting with the collapse of cryptocurrency exchange FTX in November 2022, upending the entire crypto space² and reminding banking regulators yet again of their fast-widening regulatory perimeter.³ We are still assessing the losses suffered by the crypto-exchange’s customers — estimated to be near $9 billion as of March this year.⁴ Employees who had been encouraged to invest savings in their employer were left sickened with anger⁵ Many had only learned of the company’s collapse through social media stories that circulated at the time.⁶

Admitting to “huge” management failures,⁷ founding CEO Sam Bankman-Fried (or “SBF”) was forced out⁸ when the company declared bankruptcy.⁹ Taking over in the company’s bankruptcy wind-down, restructuring CEO John Ray said he’d never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information.”¹⁰ Notably, Ray also faulted regulators in multiple jurisdictions,¹¹ who have since faced broad public ire.¹² Nor were lawmakers spared when the public learned of the extent to which FTX engaged with political campaigns¹³ lobbying firms,¹⁴ and other advocacy groups.¹⁵ 

Legislators have since pushed for greater regulation of the crypto space¹⁶ and — in a twist of irony — after spending lavishly to avoid regulators, FTX began hiring ex-regulators to help manage the fallout of its collapse.¹⁷ Spill-over effects have left the once high-flying crypto space tarnished.¹⁸ In the UK, incoming FCA Chair Ashley Alder characterized crypto platforms as “deliberatively evasive” and argued that they created “massively untoward risk” to include money-laundering risks.¹⁹

Some others have argued that the crypto-genie is out of the bottle, not to be put back in, and as such we might as well take advantage of the fact that crypto firms make for natural crime-fighting partners.²⁰ [See also the 2022 Good Counsel Article Blockchain Intelligence and BSA/AML] But amidst a spate of regulatory enforcement actions,²¹ skeptical bankers have aggressively severed ties with the crypto players they’d previously courted.²² And central banks that had begun to experiment with digital currencies²³ have seen a cratering of support for initiatives that had previously won them praise for their embrace of ‘innovation.’²⁴

As charges against SBF make their way through the courts, the ‘cryptopreneur’ has declared himself not guilty²⁵ and is seeking to have cases brought against him dismissed.²⁶ Prosecutors will spend years combing through “mountains” of evidence.²⁷ But an aggrieved public, demanding answers, can at least look forward to a new book by Michael Lewis, to be published this October.²⁸ It’s sure to make for more entertaining reading than tens of thousands of pages of court filings.

 Other Articles in the Comments, Contributions, and Conclusions Series

“What is it that distinguishes the thousands of years of history from what we think of as modern times?” 
Hidden inexactitudes 
“Radical Uncertainty” 
"Why did no one see it coming?" 
The real trouble with this world of ours 
More meaningful metrics 
“Too Big to Manage” 
Drifting into failure 
“Lying to Ourselves” 
"We have literally no time even to be astonished." 
“We need to develop a culture that empowers supervisors to act in the face of uncertainty.” 
“Culture, more than rule books…”  
“Proactive identification of threats to trust in banking.”  
Blitzkrise 
The illusion of control 
What is Conduct Risk 
“Changing banking for good” 
Outcomes oriented 
Achieving foresight 
Trust matters 
Mapping and tapping workplace networks 
“An Epidemic of Loneliness” 
The fourth wave 
System shifts 
Conduct: the new prudential risk 
The costs of misconduct 
Has banking changed for good? 
Tribulations, and trials 
Audit Quality Indicators 
Shared interest and collective action 
Nothing ventured…