Earlier this week, two of the 12 regional Federal Reserve Bank (Fed) presidents resigned following disclosures about insider trading activity in 2020, a year characterised by a waft of sweeping economic policies driven largely by the Fed. The irony of the situation was not lost on crypto Twitter.
Insider Trading Allegations
Those claiming insider trading argue that both officials helped implement policies which which they are likely to have known would benefit themselves.
In an official press release, the Boston Federal Reserve noted that president, Eric Rosengren, would retire. Interestingly, it cited health reasons. Hours later, the Dallas Federal Reserve Bank issued a notice saying that its president, Robert Kaplan, was leaving to “eliminate any distraction” relating to his personal investment activities.
As per official disclosures, both officials traded in securities while determining the nation’s monetary policy. Rosengren was active in the real estate sector which raised suspicion, particularly after some of his comments relating to the overheated housing market. Kaplan it appears was more brazen, making multiple million-dollar trades in individual equities in 2020 including Apple, Amazon and Delta Airlines.
Sven Henrich, an outspoken market commentator, pulled no punches:
Crypto Twitter Responds
If you are tuned into the macroeconomic environment, you’ll know that crypto is often on the receiving end of persistent fear, uncertainty and doubt (FUD) promulgated by those in power who stand to lose the most from its global adoption. The response to this scandal within the Fed was therefore predictable:
Reddit users had similar feelings on the matter, mostly entirely predictable:
Crypto users would probably be the first to admit that insider trading is not limited to traditional markets. Recently, OpenSea confirmed that a product manager was frontrunning NFT launches to flip them for a tidy profit.
But still, for the average person, it is likely far more concerning that those in charge of a nation’s monetary policy are front running retail investors. Events like these erode what little trust is left in traditional institutions such as the Fed. It’s no wonder that so many have turned to crypto, particularly when faced with record inflation despite persistent claims that it is “transient”.
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