Texas regulators have their eyes on one of the most powerful players in the crypto world

This story is part of CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free,here. The big news in crypto this week came via acourt filing in Texas. FTX, the crypto giant that is led by arguablythe most powerful person in the industry, is under investigation by Texas regulators for selling unregistered securities. “The Enforcement Division is now investigating FTX Trading, FTX US, and their principals, including Sam Bankman-Fried,” said Joseph Jason Rotunda, director of enforcement for the Texas State Securities Board. FTX is not alone here. Just this month we’ve seenReuters reportthat Binance is under scrutiny by Federal prosecutors. Bloomberg had the scoop thatthe SEC is investigatingYuga Labs, the company behind the Bored Apes Yacht Club, andas well as Three Arrows Capitalfor a “range of possible legal violations.” Crypto critics have long criticized regulators for allowing the industry to grow unfettered. But with the spate of high-profile investigations we’re now seeing, it appears that a genuine shift may be at hand. John Reed Stark, a crypto critic who formerly headed the SEC Office of Internet Enforcement, told me that the FTX investigation is “an extraordinary harbinger of the crypto-regulatory enforcement onslaught that lies ahead.” “You don’t mess with Texas,” said Stark who thinks state regulators throughout the country have been ahead of the curve on cracking down on crypto. But Stark — who has been highly critical of regulators in the past — says the tide is now turning. “If the crypto ecosystem is not preparing for a US regulatory onslaught then they have got their heads in the sand. FDIC, OCC, SEC, DOL, FBI, US Treasury and IRS have all stepped up their crypto enforcement efforts. And they are just getting started.” Leading crypto skeptic Nouriel Roubinionce wrote in 2019that regulators were “asleep at the wheel” when it came to crypto, so I wanted to see if he still believes that to be true. He sounded less optimistic than Stark. “In spite of recent investigations, regulators are still way behind the curve,” Roubini told me. “It is the law of the jungle in crypto.” Inside the industry, there are grumbles that the government has chosen to regulate crypto through enforcement and not rule making, a.k.a passing a bill. “We want rules,” one industry lawyer vented to me. His beef is that the SEC is enforcing the same type of cases over and over again, while not clarifying the bigger questions. “All we get from the SEC is another five cases where they are saying that you shouldn’t have issued this as a security in 2016, or they come out and bustKim Kardashianand make it a big deal as if they didn’t already bust Floyd Mayweather and Steven Segal for the same thing.”` Meanwhile in D.C., crypto money is flowing freely competing bills snake their way through the legislative process. Molly Ball broke down the latest on DC’s crypto bonanza in an extensiveTime Magazine feature. Through the Ooki Glass One case that hasn’t received much coverage outside of the crypto press but is all the buzz in the industry is theCFTC’s Ooki lawsuit. Ooki, a decentralized autonomous organization, was fined by the CFTC in September for $250,000 in the first ever case against a DAO. The suit claims that anyone who owns an Ooki token can be held liable for the actions of the larger group’s. This is a completely new legal theory,one that is controversial even within the CFTC. But the high levels of interest in the case isn’t really about Ooki, a minor player, but rather who is doing the enforcing. In the absence of specific federal legislation requiring crypto oversight, has been split up between the SEC and CFTC in what has becomeDC’s multi-year crypto turf war. The CFTC has long been viewed by the crypto industry as the more favorable of the US enforcement agencies, with Sam Bankman-Fried advocating oversight by the commission as a central plank ofhis crypto-friendly regulation push. The crypto lawyer I spoke with told me that those who prefer the CFTC over the SEC fall into two camps. The first - let’s call them The Cynics - believe that the CFTC is the more underfunded and understaffed agency…while the second camp - The Wonks - believe that cryptos more closely fit into existing commodities law. So now that the CFTC is going hard on Ooki, The Cynics have had a rude awakening…perhaps the CFTC isn’t the pushover they’d hoped for. Yes, the CFTC is doing all that to the Ooki. 15 million President Biden announced the saleof an additional 15 million barrelsof oil from the Strategic Petroleum Reserve. That’s the last of the 180 million barrels Biden announced in March that the government would sell to stabilize the then-soaring gas prices. The move comes on the heels of OPEC+ cutting production — a move that left Western officials furious. One administration official told CNN that the White House plan is to fill the reserve back up when the market makes it most advantageous. SAYLORIN’ ON Michael Saylor, founder of Microstrategy and dark priest of the church of crypto, emerged in 2020 as perhaps the most ubiquitous bitcoin booster on TV. FromFox News(“Bitcoin is the most certain thing in the world,”Saylor told Tucker Carlsonin March) toCNBCtoBloomberg, Saylor was always available to pump up bitcoin through its dizzying climb and fall. I interviewed Saylor last year forCNN’s crypto interactive(“The Bitcoin Billionaire” is what we dubbed him). However, in August word came out that Saylor was named in a suit by the D.C. attorney general for evading $25 million in taxes. He quickly stepped down as CEO of Microstrategy, and since then Saylor’s media tour has come to a halt. While his Twitter feed remains active with his same brand of bitcoin boosting, Saylor hasn’t done a TV hit since the news broke according to the Internet Archive’s Television News Archive. I emailed Saylor to ask if his TV silence has been a personal choice or if the network bookers’ invitations have dried up. Apparently his reticence extends beyond the broadcast world. We didn’t hear back. And with that I’ll leave you with Bad Brains’ classicSailin’ On (Which is of course not to be confused with Toots and Maytals’ also brilliantSailing On.)