Las Vegas Review-Journal (Sunday)
Editorial Roundup
Recent editorials in newspapers in the United States and abroad:
The Washington Post on post-ftx cryptocurrency (Nov. 16):
The supposedly responsible face of cryptocurrency turns out to have been anything but punctilious in his dealings — which should be a wake-up call to sleepy regulators and legislators alike.
Sam Bankman-fried’s empire died young last week, when his cryptocurrency exchange FTX filed for bankruptcy. The details remain scarce, but the bottom line is this: FTX was supposed to act as a custodian of the funds customers traded via the service. Instead, it took billions of dollars of that money and lent it out, including to the trading firm Alameda Research also owned by Bankman-fried. To make matters worse, Alameda’s assets were largely tied up in FTT, FTX’S own digital currency. Alameda used this FTT as collateral for a boatload of loans, possibly including the customer funds it received from FTX.
When a Coindesk report revealed some of this, what ensued was a death spiral: Investors worried about FTX’S solvency scrambled to redeem their assets, sending FTT’S value plummeting. But FTX didn’t have their assets — it had the digital currency FTT and a massive loan to Alameda that the company couldn’t return, because it, too, mostly had FTT.
This could classically be called a run on the bank. The trouble is, FTX wasn’t supposed to be operating like a bank at all. The complicated details surrounding the double-dealing and bad bookkeeping aside, the larger scheme has all the appearances of an old-fashioned scam. FTX’S customers likely thought their money was being safely held, but the exchange apparently passed it off to use for speculation. Now, Bankman-fried (who has blamed the bulk of the problems on accounting errors) has resigned as CEO, and he and his executives are sure to face civil lawsuits and possibly criminal charges, too — in the Bahamas where the offshore FTX is headquartered or in the United States, or both.
The Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are reportedly all now investigating FTX; the SEC claims it had already begun before the scandal erupted. They should pursue these cases vigorously. What’s perplexing is that the SEC and CFTC have done so little so far, even as Bankman-fried (also a Democratic Party megadonor) wooed them and everyone else in Washington with proposals that would supposedly bring the crypto industry to heel.
The entire cryptocurrency industry has proved itself vulnerable to liquidity crises, if not full-on solvency collapse like the one FTX appears to have suffered. These catastrophes might have landed Alameda in the hole from which it will never manage to climb out. Yet for all the conversation about the need for new laws to regulate cryptocurrency, there are existing rules that authorities could have — and didn’t — use.
Crypto assets are just traditional assets but on the blockchain, a digital ledger. The key to figuring out which rules to apply is finding the right analogies: What about crypto is the equivalent of a security, what’s a commodity, what’s a collectible? What’s a broker, what’s a bank? Crypto entities sometimes blur these lines, playing prime brokerage and exchange and clearinghouse all at once without registering as any of the above — claiming that, because they’re like nothing regulators have seen before, they can’t be regulated without congressional action. So far, the dodge has mostly worked: SEC defenders blame the agency’s slowness to act on pressure from lawmakers to hold off enforcement until new laws are written. This can’t be allowed to continue.
Responsible agencies, from the SEC and CFTC to the Federal Trade Commission and Consumer Financial Protection Bureau, with or without congressional help, should develop guidance that draws clearer lines defining which of them has jurisdiction over novel products and their various attributes. Then they need to lay out what requirements apply — tweaking the rules they’ve written for the traditional financial system to fit the crypto realm where necessary. They should demand registration and go to court when companies refuse to come to the negotiating table.
Some things are already clear. FTX, for instance, should never have been allowed to hand its customers’ money over to an outside party that also belongs to its owner. Other questions are more complicated. Should exchanges like FTX be allowed to accept their own token as collateral? Should they be allowed to make leveraged bets at all? What level of reserves should be required, and what should those reserves consist of? Confected, combustible tokens probably shouldn’t be an acceptable answer.
Even the most sensible guidelines and the most robust enforcement won’t change the reality that crypto is inherently risky — because the value of all these tokens depends, in the end, on how much people believe they’re worth rather than anything tangible in the real world. Regulators and lawmakers crafting any crypto rules cannot allow consumers to believe their money is safer than it really is or lead businesses to believe they’re entitled to bailouts. Bankman-fried created an illusion that the cryptocurrency market might actually be a place where ordinary people could safely and responsibly invest their assets. The truth might be that it never will be. Either way, investors deserve a regime stricter and more transparent that what they have gotten.
The New York Times on extremist violence (Nov. 19):
Sometime in May 2020, Payton Gendron, a 16-year-old in upstate New York, was browsing the website 4chan when he came across a GIF.
It was taken from a livestream recording made the previous year by a gunman as he killed 51 people and wounded more than 40 others at two mosques in Christchurch, New Zealand. The killer had written a manifesto explaining that he was motivated by the fear of great replacement theory, the racist belief that secretive forces are importing nonwhite people to dilute countries’ white majorities.
Seeing the video and the manifesto “started my real research into the problems with immigration and foreigners in our white lands — without his livestream I would likely have no idea about the real problems the West is facing,” Gendron wrote in his own manifesto, posted on the internet shortly before, officials say, he drove to a Tops grocery store in Buffalo and carried out a massacre of his own that left 10 Black people dead.
The authorities say Gendron’s attack in May mimicked the massacre in Christchurch not just in its motivation but also in tactics. He reduced his caloric intake and cataloged his diet to prepare physically, as the Christchurch killer did. He practiced shooting. He wrote slogans on his rifle, as the Christchurch gunman did. He livestreamed his attack with a Gopro camera attached to his helmet, with the idea of inspiring other attacks by fellow extremists. Gendron’s screed ran to 180 pages, with 23% of those pages copied word-forword from the Christchurch killer’s manifesto, according to an investigative report on the attacks released last month by New York’s attorney general, Letitia James.
On the day of the shooting, state Senator James Sanders echoed the horrified response of many: “Although this is probably a lone-wolf incident, this is not the first mass shooting we have seen, and sadly it will not be the last,” he said.
It’s unfortunate that the term “lone wolf” has come into such casual use in the years since the Sept. 11 attacks. It aims to describe a person — nearly always a man — who is radicalized to violence but unconnected to an organized terrorist group like al-qaida. But it is wrong to think about violent white supremacists as isolated actors.
There are formal white supremacist organizations going by names like Atomwaffen Division (Canada, Germany, Italy, Britain, United States), Honor and Nation (France), the All-polish Youth (Poland). But while the majority of adherents to the white supremacist cause aren’t directly affiliated with these groups, they describe themselves as part of a global movement of like-minded people, some of whom commit acts of leaderless violence in the hopes of winning more adherents and destabilizing society.
The atomized nature of the global white extremist movement has also obscured the public’s understanding of the nature of their cause and led to policy prescriptions that aren’t enough to address the scope of the threat. Thoughts and prayers alone will not solve the problem, nor will better mental health care, important though all those things are. One missing piece of any solution is acknowledging that right-wing extremist violence in the United States is part of a global phenomenon and should be treated that way.
There has been a steady rise in political violence in the United States in the years since Donald Trump became president. Threats against sitting members of Congress have skyrocketed. The husband of the speaker of the House was assaulted in his home by a man wielding a hammer. This year, venues from school board meetings to libraries have been the sites of physical clashes. The majority of the political violence in the past few years has come from right-wing extremists, experts say.
The country cannot accept violence as a method of mediating its political disagreements. There are steps the United States should take now, including cracking down on illegal right-wing paramilitary groups and weeding extremists out of positions of power in law enforcement and the military. Extremists succeed when they have access to power — be that positions of power, the sympathy of those in power or a voice in the national conversation. They should be denied all three.
Violent right-wing extremists harbor a variety of beliefs, from a loathing of the government to explicit white supremacy. During his time in office and in the years since, Trump and his political allies have not only encouraged political violence, through their silence or otherwise, they have also helped bring explicitly white supremacist ideas like the “great replacement” into mainstream politics and popular culture. “This extremism isn’t going to go away or moderate until the people who have normalized it realize their culpability in the things that it inspires,” Oren Segal, the vice president of the Center on Extremism at the Anti-defamation League, said in an interview.
One of the best ways to counter a global ideology of violent extremism in a country that also wants to protect civil liberties is to create problems for extremists — to work to make them less popular and less capable, notes Daniel Byman in his new book, “Spreading Hate: The Global Rise of White Supremacist Terrorism.”
Domestic law enforcement agencies in the United States already have effective tools to target organized extremist groups, including wiretaps and undercover informants. They also don’t face language and cultural barriers that they may have had focusing on jihadis. A pervasive problem, though, is the political will to turn the power of the state against white supremacists. Too often, extremism researchers point out, there’s a reluctance in white-majority nations to see white extremists as threatening as nonwhite foreigners.
The United States is also newer to thinking about this white extremism as a transnational problem. “European intelligence officials have long expressed frustration that their U.S. counterparts have not answered their requests for legal assistance and information,” Byman wrote.
The Biden administration has at least started to heed the warnings of more than a decade’s worth of intelligence reports suggesting that domestic extremism is a problem with a global reach. The National Strategy for Countering Domestic Extremism, released last year, noted that “aspects of the domestic terrorism threat we face in the United States, and in particular those related to racially or ethnically motivated violent extremism, have an international dimension.”
The strategy laid out some good ideas about solutions to the threat, such as wider and deeper information sharing between the U.S. government and foreign nations about extremist groups and their networks, their finances and their movements. It directed the State Department to leverage public diplomacy to raise awareness about the threat and help counter extremist propaganda and disinformation. The strategy also noted that the cross border nature of extremist networks means the authorities can intercept their communications. The tip that helps thwart the next attack by white supremacists inside the United States could very well come from overseas.
The strategy also raised the possibility of designating some foreign right-wing extremist groups as foreign terrorist organizations or “specially designated global terrorists,” which would make it illegal for Americans to support or receive training from them. But such an approach isn’t a panacea and carries serious risks — it could hamper efforts to deradicalize extremists, for instance — and runs counter to a lesson of the war on terrorism, which was that not all extremist groups posed an equal danger to the homeland.
It is encouraging that this strategy is in place, but it needs more attention and urgency, from lawmakers and from the American public, to be successful. Congressional oversight committees will hold annual hearings to see whether the United States is making progress on this strategy, but so far it is not clear how effective it has been.
Another approach tried in about a dozen countries around the world is deradicalization programs, which encourage extremists to either change their minds or at the very least reject violence. The German and British governments, in addition to the United States, have had some success with deradicalization programs. In Germany, Exit-deutschland works with neo-nazis. In Britain, a program called Prevent that originally focused on jihadists has now been reoriented to white supremacists, though there are complaints that the net of problematic right-wing views is being cast too widely.
As with all these approaches, one of the precarious aspects of the domestic fight against far-right and white supremacist extremists is that the government’s response must try to avoid alienating people who believe in things like expansive gun rights or strict limits on immigration yet eschew violence. Often, they are the only credible messengers who can reach the deeply radicalized and talk them back from a more violent course.
Recognizing that violent white supremacy is a global problem should help the United States and its allies develop more cooperative, international solutions. Success will be difficult to measure; the ideology may never disappear, but levels of violence can be reduced. Most important, if lawmakers and ordinary Americans make a concerted effort to drive extremist rhetoric out of mainstream politics, the influence of these groups will again fade.