New York’s top financial regulator, Benjamin Lawsky, has made a career out of garnering unprecedented fines from the global financial elite.
He is known for holding their license to do business in New York over their heads and securing fines several times those of federal authorities on more than one occasion. However, one of the biggest scandals of the last decade, the FOREX rigging by JPMorgan, Citigroup, Barclays, and Royal Bank of Scotland, will essentially go unpunished. The banks have collectively come to an agreement to pay a fine of some $5 billion, about half of what they made through illegally manipulating the market.
Lawsky has warned that individuals working at the banks could face charges in addition to the settlements reached with the banks, and those operating outside the US may face penalties in other jurisdictions, such as Britain. The Swiss bank UBS has mostly avoided any prosecution because it was the one who alerted authorities that something was wrong.
The government has recovered chat room conversations that show traders regularly divulging the orders of their clients to each other to make the proper calls so they profited the most. UBS is implicated especially here for having fixed the LIBOR rate.
Also read: Lawsky: BitLicense Finalized by End of May
Will Bitcoin Over-Regulation Leave With Him?
At the same time, Lawsky has just announced that he will be stepping down as the head financial regulator in New York. This comes suddenly for those who’ve been watching the BitLicense developments carefully, and leads one to wonder if it was a planned exit or if it is related to feeling suddenly ineffectual the face of seeing these banks essentially make off with $5 billion in wrongful earnings. Anyone else makes $10 billion illegally; they go to prison. Bankers do it; they get to keep $5 billion. Certainly it would be hard for any financial regulator to continue to take himself seriously in the face of such results as that.
The BitLicense proposal and the regulations it has implied have been unpopular in many parts of the cryptocurrency community. For one, they make it incredibly expensive to start up in the field, especially for those without deep ties to the traditional financial industry. (Which could be seen as the point.) Other problems include how vague certain parts of it are, and the fear that its policies will eventually rule nationwide.
Lawsky has been the face of the BitLicense proposal. Perhaps his exit to start a legal and consulting firm, leveraging his deep ties in the financial and legal world developed over his career as a financial regulator, will signal a brighter future for the really small players who can’t presently afford to do business under the existing proposal.