Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, released information on day 21 of the Trump-Republican shutdown—which Trump and Republicans initiated because of their refusal to negotiate with Democrats to protect health care for millions of Americans. Today’s release highlights how the ongoing shutdown has left average American investors more vulnerable to another sudden crypto crash, particularly with the Securities and Exchange Commission (SEC) effectively shuttered as a result of the shutdown.

What Happened?

On October 10th, cryptocurrencies plunged in value in a brief, but significant flash crash that left investors with billions of dollars in losses. This crash followed Trump’s threat of a 100% tariff on imports from China, along with new export controls targeting what he called “critical software.” Spooked by the news, and with traditional markets closed for the day, investors turned to dumping their crypto, such as bitcoin and memecoins, in favor of perceived safe havens such as government-issued Treasury bonds and gold. While the Nasdaq Composite dropped 3.56% and the S&P 500 posted its worst day since April, crypto experienced the most significant drop:

• Bitcoin fell roughly 14.6% on the afternoon of Oct 10
  
• Ethereum, the world’s second largest cryptocurrency by market value, fell roughly 21%
  
• Dogecoin dropped more than 50%
  
• President Donald Trump’s $TRUMP coin fell roughly 63% at its lowest point
  

While crypto has recovered slightly, both average and institutional investors still suffered huge losses. This highlights the volatility in the crypto market that Ranking Member Waters has long warned about. These risks are only amplified as Trump and Republicans in Congress work to integrate crypto into the traditional financial system without first establishing the proper guardrails—increasing the likelihood of future crashes just like this one that could more rapidly spread to traditional finance.

How Does the Trump-Republican Shutdown Leave Investors More at Risk?

Equally concerning, in the midst of the Trump-Republican shutdown, the SEC and Commodity Futures Trading Commission (CFTC) are effectively shut down. Ranking Member Waters covered the dangerous consequences of the SEC’s shutdown on Day 8. With 90% of the agency’s employees furloughed and most activities suspended, the SEC currently lacks the resources and personnel to even respond to emergencies like this one.

In fact, the crash has raised serious and legitimate concerns about potential insider trading and specifically whether a crypto trader was given information about the upcoming tariff announcements. As Molly White explains, in the aftermath of the crash, analysts noticed a wallet that had deposited millions into the Hyperliquid decentralized exchange before the crash, taking a heavily leveraged short position on bitcoin and ether. When the market plummeted, they profited to the tune of more than $150 million.

This very serious allegation demands a thorough investigation by Wall Street’s cops on the beat. The SEC and CFTC should be working diligently to get to the bottom of the flash crash, determine whether any wrongdoing occurred, and hold criminals accountable if insider trading or market manipulation is found.

Unfortunately, with the agency shuttered during the Trump-Republican shutdown, oversight is stalled, and we may never get the answers to these important questions. This leaves our markets and average investors without critical protection and vulnerable to another disastrous meltdown.

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