The SEC is suing cryptocurrency network Terraform Labs and its creator and CEO, alleging that the company orchestrated a multibillion dollar securities fraud by offering and selling “an inter-connected suite of crypto asset securities, many in unregistered transactions” and which led to widespread turmoil in the industry when its stablecoin collapsed.

Rep. Dusty Johnson (R-SD), chair of the House Agriculture Committee’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development, said in an interview with Bloomberg that, “in the wake of the FTX debacle, Congress is ready to step up and provide some additional common-sense protections to investors and to those that hold crypto.” He also said that he plans to hold hearings on crypto issues and work with the Financial Services Committee and its digital assets subcommittee chair, Rep. French Hill (R-AR).

The SEC voted 4-1 in favor of a proposal that is likely to make it more difficult for cryptocurrency firms to serve as digital asset custodians in the future. The rule has yet to be officially approved by the agency but would amend the 2009 Custody Rule to apply to custodians of “all assets.” Chairman Gary Gensler said, “Today’s rule, the 2009 rule, covers a significant amount of crypto assets…Further, though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians. Rather than properly segregating investors’ crypto, these platforms have commingled those assets with their own crypto or other investors’ crypto.” Commissioner Hester Peirce voted against the rule.

The Federal Deposit Insurance Corporation announced that it has sent cease-and-desist letters to a cryptocurrency exchange, CEX.IO Corp., as well as Zera Financial and two cryptocurrency news websites, Captainaltcoin.com and Banklesstimes.com. The letters direct them to stop giving “false and misleading” information to consumers about deposit insurance coverage.

The CFTC filed suit against a California man and his company, Vista Network Technologies, which is purportedly a digital asset investment company, but the agency alleges that it functioned in a way that is “consistent with a Ponzi scheme” and made more than $7 million by offering potential investors promises of unusually high returns.

Sen. Tommy Tuberville (R-AL) is reintroducing legislation that would aim to block the Department of Labor from restricting employers and investment firms from offering cryptocurrency in their 401(k) retirement plans. Rep. Byron Donalds (R-FL) is introducing the companion bill in the House. The bill is a response to DOL guidance in 2022 that suggested that retirement plan administrators investing employee funds into digital assets may be investigated.

President Biden announced that he has selected Federal Reserve Vice Chair Lael Brainard to serve as the top economic policy adviser at the White House. She will replace Brian Deese as director of the National Economic Council and will be the first woman to lead the council since 1996.

Bloomberg reported on February 13 that the Securities and Exchange Commission is planning to propose a change in regulations in order to make it harder for cryptocurrency firms to be “qualified custodians” or hold assets for managers like hedge funds, private equity firms, and pension funds.

House Financial Services Committee Chairman Patrick McHenry (R-NC), digital asset subcommittee chair French Hill (R-AR), and Rep. Bill Huizenga (R-MI) sent a letter to SEC Commissioner Gary Gensler questioning the timing of charges filed against FTX founder Sam Bankman-Fried and his subsequent arrest prior to his scheduled testimony before the panel. The group is demanding records and communications between the SEC and Department of Justice related to his arrest. Separately, Ranking Member Maxine Waters (D-CA) urged that McHenry “immediately ensure the presence” of Bankman-Fried and other FTX leaders before the committee to help in the FTX investigation.