The FTX Collapse and the Risks of Crypto Corruption

Last month, the cryptocurrency industry experienced a seismic shakeup as FTX—a Bahamas-based crypto exchange led by the young ex-billionaire Sam Bankman-Fried—collapsed. It turns out that FTX was riddled with fraud, and many of the company’s assets are still hidden or missing. Quite understandably, most of the reporting on FTX’s wrongdoing has focused on how FTX defrauded investors, customers, and the U.S. government. But there is another aspect of the case that deserves further scrutiny: the possibility that FTX corrupted Bahamanian regulators, and that this corruption facilitated the company’s other types of malfeasance.

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Anticorruption Parties in Central and Eastern Europe: Why Do They Fail, and How Can They Succeed?

Since the collapse of the Soviet Union, Central and Eastern Europe (CEE) has seen both highly unstable party systems and high rates of corruption. As a result, lots of new parties keep popping up, and an anticorruption focus has proven to be a great way for them to get noticed. In fact, studies have found that new parties are more successful when they center their message on fighting political misconduct.

Among those that actually win, some of these anticorruption parties have been modestly successful in passing reforms. But many other anticorruption parties have floundered when in office. Part of the problem is that these parties often make lofty promises but fail to put forward actual, workable plans. Enough voters will still vote for the “anticorruption” party as a way of expressing disapproval for the incumbent government, without necessarily paying close attention to whether the anticorruption party and its leaders are willing or able to follow through on their promises. As a result, numerous CEE countries have had bad experiences with anticorruption parties that, when in office, appear to have little idea how to govern differently from their predecessors—and sometimes little apparent interest in doing so. Consider a few examples:

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Can Argentina Prosecute its Leaders Without Dragging Down its Democracy?

Prosecuting a former leader for corruption is no easy task, but it is one that a lot of countries have had to undertake. In fact, since 1980, roughly half of the world’s nations have seen their former leaders jailed or prosecuted. The vast majority of those cases involved corruption charges.

Argentina has been in this situation quite a few times. Most recently, Cristina Fernández de Kirchner—the country’s ex-president and current vice-president—has been standing trial for having allegedly diverted state funds to a friend through fraudulent public works contracts. This seems like a victory for rule of law. But with the divisiveness and instability that the process has caused, it’s not clear whether the prosecution of Kirchner has done more good than harm. Because this is probably not the last corruption case that Argentinian authorities will bring against a former leader, enforcers should learn from the problems that have arisen from the Kirchner investigation.

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