- First Republic Bank’s collapse continues to highlight potential flaws in the U.S. financial system.
- Reports indicate that several lawmakers traded the bank’s stock before the collapse.
- Concerns of insider trading within Congress have risen.
The recent string of banking collapses in the United States has brought to the fore many long-running problems with the U.S. financial system.
In the latest instance, reports have indicated that lawmakers traded First Republic Bank stock in the weeks leading up to its collapse at the end of April, sparking speculations of insider trading and comparisons between the U.S. financial system and the transparency of the blockchain. Among these reports, one stood out.
Congresswoman Sells First Republic Stock, Buys JP Morgan Before Collapse
Representative Lois Frankel revealed in an April 28 financial disclosure report that she sold First Republic shares on March 16, the same day reports came out that the troubled bank had received a $30 billion cash infusion from the country’s biggest banks, including JP Morgan, its eventual buyer, for which She also bought shares on March 22, per Newsweek.
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Though Frankel has denied any wrongdoing, attributing the trades to her money manager, whom she claims acts independently, the news has again raised concerns over trading in Congress. Many speculate that the lawmaker placed trades based on proprietary information.
Upstream Data Business Development Manager Adam O. asserts that Frankel’s actions highlighted the “rigged” financial system while arguing for Bitcoin and blockchain as a better alternative.
Unlike other financial ledgers, the transparency of the blockchain allows users to track transactions in real time. This is because blockchain data can be accessed from any computer at any time.
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The importance of this was recently highlighted as Tron founder Justin Sun may or may not have attempted to farm SUI tokens meant for Binance’s retail customers.
Whale Alert, a crypto whale transaction tracker, highlighted suspicious transactions. Binance disclosed that it had already warned the crypto billionaire against participating in the Binance Launchpool for the new crypto project.
“On the bright side, blockchains are transparent,” Binance Chief Executive Officer Changpeng “CZ” Zhao said in a warning to Sun at the time.
On the Flipside
- While the blockchain is transparent, tools like Tornado Cash can make it difficult to track funds.
- On Tuesday, May 2, a group of bipartisan lawmakers, including Alexandria Ocasio-Cortez, proposed a bill to ban lawmakers from owning stocks.
Why You Should Care
The opaqueness of the traditional financial system and its susceptibility to corruption is a narrative at the core of the development of cryptocurrencies. Concerns over the lack of transparency and accountability in Congress could push more people to appreciate the transparency of the blockchain.
To learn more about the First Republic Bank collapse, read this:
First Republic Is the Latest Bank to Fail: Is Crypto the Safer Bet?
Check this out to understand how a looming Supreme Court decision could affect crypto regulations:
U.S. Could Repeal Chevron Deference Doctrine. Will It Impact SEC Crypto Enforcement?
