The spectacular collapse of FTX warrants every bit of attention that it has garnered so far. The bosses of the once high-flying business were allegedly involved in shady business operations behind-the-scenes using customer funds.
Sam Bankman-Fried, the 30-year-old founder of the bankrupt crypto exchange was extradited on suspicion of committing “one of the biggest financial frauds in US history.” Meanwhile, two of his former colleagues – Gary Wang and Alameda’s Caroline Ellison pleaded guilty to several charges of fraud.
Even after more than one month of the unraveling, FTX dominated the news section of both crypto and traditional media. But there are equally or more damaging activities that have been carried out by well-known companies with good financial standing that begs similar attention, if not more.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families.” This is what the Consumer Financial Protection Bureau Director Rohit Chopra said about the whole event. But the “world” may have been more fixated on the damage done by FTX, while billion-dollar scandals by traditional giants such as Wells Fargo do not receive the necessary attention.
Echoing a similar sentiment, Ripple CEO Brad Garlinghouse attached an FTX-related meme and tweeted,
Some XRP enthusiasts even blamed the SEC for its failure to go after the likes of FTX (that established itself as a political megadonor) and Wells Fargo to protect customers from losing billions and instead pick easy targets such as the blockchain firm Ripple.
For the uninitiated, Wells Fargo was fined $1.7 billion Consumer Financial Protection Bureau in the largest ever civil penalty imposed by the agency, an additional $2 billion for its role in mismanaging consumer loans for over 16 million customers.
The CFPB Director called the nation’s fourth-largest bank to be a “repeated offender” and was said to have caused billions of dollars in harm to its customers, including the loss of vehicles and homes for thousands. The bank was also accused of fraudulently assessing fees and interest charges on automotive and mortgage loans, had cars “wrongly repossessed,” and misapplied customers’ payments to vehicle and mortgage loans.
Wells Fargo even opposed any mortgage modifications that the regulatory watchdog believe should have been approved. The refusal led some borrowers to lose their homes, an issue that the bank was purportedly aware of before addressing it years later, the CFPB said in a statement.
From illegal overdraft fees and other erroneous charges on cheque and savings account customers to incorrectly freezing accounts, Wells Fargo had made some serious damage.