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Binance crackdown: regulators tussle with ‘wild west’ of crypto

Changpeng Zhao’s company Binance is everywhere and yet based nowhere. The cryptocurrency exchange has processed trillions of dollars in trades this year as it transfers digital and conventional money around the world through a constellation of affiliates. And yet it has no headquarters. 

Incorporated in the Cayman Islands, the company has grown at extraordinary speed into a leading player in the fledgling industry. But the 44-year-old Canadian-Chinese mogul’s business empire is now attracting intense scrutiny from global watchdogs as they grapple with new financial entities that act in many jurisdictions but are rooted in none.

Binance has led a peripatetic life since its founding by Zhao, who goes by the moniker “CZ” (pronounced ‘Sea-Zee’), in China four years ago. The company shifted its operations after a broad crypto crackdown by Chinese authorities in 2017. After it landed in Japan, regulators warned in 2018 it was doing unauthorised trading in cryptocurrencies in the country. Malta’s then prime minister Joseph Muscat welcomed Binance with open arms that year, but in 2020 its financial regulator proclaimed that despite the company’s operations in the EU state, it was not responsible for regulating the exchange.

Column chart of Monthly spot trading volumes ($  bn) showing Binance attracts massive trading volumes during crypto boom

Zhao, whose wealth was valued by Forbes at almost $ 2bn when bitcoin was on the ascent in March, insists the company has no formal headquarters. “You have to have an entity, you have to have a headquarter, you have to have a bank account. All of those things don’t need to exist for blockchain companies,” he told a crypto conference in 2020. He did not respond to a request to be interviewed for this article.

Regulators on three continents are clamping down on the company, one of the world’s biggest cryptocurrency exchanges by volume, as they attempt to police the porous border between the largely freewheeling crypto sector and the more tightly-regulated conventional financial market.

The UK’s Financial Conduct Authority last week banned a regulated affiliate called Binance Markets Limited from offering any traditional financial services that fall into the regulator’s remit, such as arranging investment deals in the UK. It also said the group was not authorised to conduct crypto asset business within Britain’s borders and warned consumers that transactions with unregistered companies are generally not covered by investor protection schemes.

The UK’s Financial Conduct Authority last week banned Binance Markets Limited from offering any traditional financial services that fall into the regulator’s remit
The UK’s Financial Conduct Authority last week banned Binance Markets Limited from offering any traditional financial services that fall into the regulator’s remit © FCA

The move by the UK regulator follows a warning from Japan last month that mirrored the concerns first expressed in 2018. And it comes as the company is preparing to pull out of the Canadian province of Ontario following a broader crackdown by its Securities Commission. The Cayman Islands Monetary Authority said on Thursday that Binance is not authorised to run a crypto exchange there either, and is “investigating” whether any of its operations are based in the tax haven. On Friday, Thailand filed a criminal complaint against the company for allegedly operating without a licence.

While the organisational charts of most companies resemble a pyramid, with a headquarters at the top and subsidiaries below, Binance’s is more like a hydra, with semi-autonomous units operating around the world. In Europe, Zhao-owned companies in London and Vilnius, which are not regulated as financial firms, help pump hard currency on and off the main Binance exchange through deals with UK-based payments processors including Clear Junction and Checkout.com.

Tom Keatinge of the Royal United Services Institute: ‘Crypto exchanges are the frontier between the dark web and the regulated fiat world’
Tom Keatinge of the Royal United Services Institute: ‘Crypto exchanges are the frontier between the dark web and the regulated fiat world’ ©  AB Forces News Collection/Alamy

Binance says it is rapidly hiring more compliance staff and using advanced tools to block any potential illicit activity from its systems. “We take our legal obligations very seriously and have worked hard to build a robust compliance programme,” it said in a statement to the Financial Times.

The regulatory offensive against the company and some of its affiliates comes as financial supervisors around the world worry that money from illegal drugs, ransomware and other crimes is washing back into the legitimate banking system through unmonitored links with crypto.

“Crypto exchanges are the frontier between the dark web and the regulated fiat world,” says Tom Keatinge, a financial crime expert at the Royal United Services Institute. “The FCA should be congratulated for cracking down on Binance and putting the fear of God in others.”

Regulatory limits

Yet the UK’s intervention has had limited practical effect. Binance.com customers briefly lost access to sterling withdrawals and some UK customers said their bank transfers to the exchange had been blocked, but consumers could still add or remove euros from the system, or take their digital coins off Binance’s platform directly.

Binance’s Changpeng Zhao: ‘You have to have an entity, you have to have a headquarter, you have to have a bank account. All of those things don’t need to exist for blockchain companies’
Binance’s Changpeng Zhao: ‘You have to have an entity, you have to have a headquarter, you have to have a bank account. All of those things don’t need to exist for blockchain companies’ © Akio Kon/Bloomberg

The outage earlier in the week frustrated some clients, with one small business owner in the UK saying: “It fills me and no doubt many others with suspicion . . . At this moment I am not confident my money is safe any more.”

The Binance clash is a taste of things to come, say anti-money laundering experts. With evidence dating back to 2015 that terrorists and criminals were using crypto to move money around, the Financial Action Task Force, which spearheads the global fight against dirty money, called for a clampdown in 2019. Fifty-two countries and territories now regulate “virtual asset service providers”, and six have banned them outright.

Authorities fear that people are using dirty money to buy the digital equivalent or accepting it as payment for criminal activities. Without proper controls, crypto exchanges can become a way to launder that money into clean euros or pounds.

“Crypto has been the wild west of the financial services sector, and to a large extent it still is,” says David Lewis, FATF’s executive secretary. “We are not looking to close down these currencies. We are looking to support responsible innovators and create a level playing field. There is still a lot of regulatory arbitrage going on.”

The crypto anti-money laundering rules, launched in 2019, require companies to prove they can screen out criminal customers and flag up suspicious transactions. Regulators agree that most money laundering still goes through cash, ordinary bank accounts and shell companies, but they don’t want digital exchanges to provide criminals with another avenue.

Banks already spend billions on anti-money laundering controls, with mixed success; now crypto providers face the same demands. That will certainly drive up costs but could also broaden the sector’s appeal.

Binance’s outage this week frustrated some clients, with one small business owner in the UK saying: ‘At this moment I am not confident my money is safe any more’
Binance’s outage this week frustrated some clients, with one small business owner in the UK saying: ‘At this moment I am not confident my money is safe any more’ © Tiffany Hagler-Geard/Bloomberg

“To be regulated adds a layer of credibility to the industry. Not only will your money be safe, but it will have more credibility that we are trying to stop financial crime,” says Peter Oakes, a former Irish banking regulator who now works with fintech companies. “It’s better to have 30 per cent more overhead from risk and compliance costs than zero revenue.”

Compliance matters

Some customers appear to appreciate that attitude. Since the Binance crackdown was announced, Bitstamp, a Luxembourg-regulated rival that boasts of its “mature approach”, has seen a 138 per cent increase in new customer applications, says chief executive Julian Sawyer.

Binance itself has struggled at times to keep its compliance function on par with its sweeping operations in the view of several people directly familiar with the group’s practices. Those operations include leveraged trading in digital coins such as bitcoin and ether, futures, options, savings, lending and stock tokens. The company has processed $ 5.4tn in “spot” crypto transactions this year, according to crypto and blockchain research group TheBlockCrypto.

David Lewis of the FATF: ‘We are not looking to close down these currencies. We are looking to support responsible innovators and create a level playing field’
David Lewis of the FATF: ‘We are not looking to close down these currencies. We are looking to support responsible innovators and create a level playing field’ © Michel Euler/AP

The exchange was one of the two leading destinations for illicit bitcoin flows in 2019, with about $ 770m moving on to the platform from allegedly criminal enterprises, according to Chainanlysis, a digital asset industry data provider. When the report was published in 2020, Binance said it was “compliant and adheres to local regulations” in all markets where it operated.

An employee at a company that used to connect Binance to traditional financial markets says that while the exchange “talks a big game on anti-money laundering and know-your-customer” rules, it was “resistant to throwing human resources at compliance issues” and preferred to automate its controls.

The person adds that his company ultimately cut off ties with Binance over worries that it was “not a great advert for the [crypto industry]”.

Two people familiar with Binance’s operations say that as its business has boomed, it has often lacked the resources and practices needed to handle thousands of transactions. One of them described some of Binance’s clients as “toxic”, because they appeared to be so high risk.

Chief Ontario regulator Grant Vingoe: ‘Firms that have nothing to hide should embrace this opportunity to enhance confidence in their business by seeking registration and appropriate oversight’
Chief Ontario regulator Grant Vingoe: ‘Firms that have nothing to hide should embrace this opportunity to enhance confidence in their business by seeking registration and appropriate oversight’ © OSC

Binance says it is “categorically untrue” that it lacks sufficient compliance capacity and that is continuing to invest in the area.

Binance Markets Limited, which is controlled by Zhao, attempted to set up a “ringfenced” exchange in the UK that would have allowed for trading in digital tokens against the euro and sterling. But it pulled its application in May after the FCA demanded “exhaustive disclosure” and hundreds of pages of documents related to anti-money laundering controls, according to a person familiar with the matter.

Binance says it has “consistently invested in its compliance efforts . . . including using some of the top [regulation technology] tools and vendors in the space and making strong hires”. The group adds that it has doubled the size of its compliance and law enforcement team, which now numbers in the “hundreds”, over the past year.

The FCA says that more than 90 per cent of the virtual exchange companies that initially tried to meet its standards to become registered crypto firms have withdrawn their applications. “It is a tough process and a lengthy process,” says Ryan Moore, chief executive of Mode, which finally secured its registration last week after working with the watchdog for nearly two years. “It’s a significant investment of people and technology.”

Some crypto advocates argue that the regulatory crackdown will have unintended consequences. They particularly cite FCA bans on the sale of crypto-based derivatives. “It’s forcing consumers to look offshore where they won’t be given the same level of protection,” says Nick Jones, who runs Zumo, a UK crypto platform that is in the formal FCA registration process.

Others say that tighter enforcement will bolster investor confidence and help the sector grow. “Firms that have nothing to hide should embrace this opportunity to enhance confidence in their business by seeking registration and appropriate oversight,” the chief Ontario regulator Grant Vingoe said recently.

One UK-based user of the Binance exchange took a similar view, saying that he planned to keep using the platform but worried that if interventions by regulators became a “regular occurrence [forcing operators to] flip virtual headquarters from one place to another in a cat ‘n’ mouse game” he might need to rethink his allegiance.

“Crypto is enough of a casino without having to also worry about the real money part of the equation,” he adds.

Additional reporting by Joshua Oliver in London and Robin Harding in Tokyo

Adam Samson can be reached at [email protected] or on Telegram @adamsamsonFT. Brooke Masters can be reached at [email protected]

Author: Adam Samson and Brooke Masters in London
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Ethereum price boom could lead to 'crackdown' from regulators

This post originally appeared on Daily Express :: Finance Feed

Ethereum price boom could lead to 'crackdown' from regulators

Ethereum just broke the £2,000 ($ 2,790) mark today, as the cryptocurrency continues to go from strength to strength. Over the past year, the coin has shot up by more than 10 times in value and shows no sign of slowing down. One expert has claimed that it is quickly becoming the people’s cryptocurrency.

Jason Cozens, Founder & CEO of Glint, said that it offers consumers “greater control” over their investments away from the mainstream banks.

He said: “Ethereum’s performance to smash the £2,000 barrier for the first time is further indication that alternative currencies are now firmly established amongst consumers as a viable store of value and means of exchange.

“Consumers have had enough of being punished for saving and they’re increasingly embracing alternatives to fiat currencies that offer greater control over how they save and spend their money.”

However, Mr Cozens added the financial system is now clocking on to the rise of cryptocurrencies.

He believes any incoming regulations will leave cryptocurrencies facing the same factors which can erode fiat currencies – money issued by governments.

He said that “recent announcements from NatWest and HSBC are designed to stifle the growth of cryptos whilst the creation of a Central Bank Digital Currency (CBDC) taskforce demonstrates that regulators will look to curtail and ultimately crush their mainstream use by establishing a digital currency tied to sterling.”

Mr Cozens continued: “However, this will leave consumers at the mercy of the same factors which erode the value of fiat currencies and decline the value of our savings and purchasing power.

“Rising inflation coupled with the threat of negative interest rates, continued quantitative easing and record levels of government borrowing devalue sterling – a UK CBDC would lose value in the same way as cash has over time.”

READ MORE: Ethereum price prediction: Could Ethereum reach $ 3,000?

As with any investment, especially cryptocurrency, it is important to note that nothing is a certainty.

Money experts Ramsey Solutions said on its website: “Trading in cryptocurrency is like gambling.

“Because it’s exchanged peer to peer without any tie to regulatory standards, there’s no pattern to the rise and fall of its value.

“You can’t predict changes or calculate returns like you can with growth stock mutual funds.

“There just isn’t enough data, or enough credibility, to create a long-term investing plan based in cryptocurrency.”

Ripple plans to go public after settling lawsuit with regulators – reports

Author: RT
This post originally appeared on RT Business News

Ripple plans to go public after settling lawsuit with regulators – reports

Major cryptocurrency company Ripple has not given up on its plans to go public and could file for the listing after it settles a legal action brought against it by the US Securities and Exchange Commission (SEC).

That’s according to Yoshitaka Kitao, CEO of Japanese financial giant SBI Group, who said that both Ripple CEO Brad Garlinghouse and its executive chairman, Chris Larsen, are planning to take Ripple public.

“After the current lawsuit, Ripple will go public. The current CEO wants to do that. Chris wants to do that,” Kitao said during an earnings presentation call, as quoted by the Cointelegraph.

He added that SBI’s investment in Ripple would pay off following a potential public listing while the firm is the largest outside shareholder of Ripple.

“We have been investing in fintech companies and we adopt that technology in our group, and also we spread that technology across the industry. That is SBI Group’s basic strategy,” Kitao said.

Also on rt.com Ripple’s XRP cryptocurrency surges in what may be another coordinated buying frenzy

Speaking at the World Economic Forum in Davos in January 2020, Ripple’s CEO suggested that the company could go public in the next 12 months. “We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side. It’s a natural evolution for our company,” Garlinghouse said.

In December, the SEC filed a lawsuit against Ripple Labs, as well as Garlinghouse himself and Larsen. The US regulator alleged that the XRP token was classified as a security and accused Ripple and the two executives of raising more than $ 1.3 billion through an “unregistered, ongoing digital asset securities offering” to investors beginning in 2013.

Since then, the company has managed to achieve a series of legal victories, while the price of XRP has risen above $ 1.40, a level not seen since January 2018.

For more stories on economy & finance visit RT’s business section

When the power went out, Texas oil and gas regulators rushed to defend the industry’s image

When the power went out, Texas oil and gas regulators rushed to defend the industry’s image

When the power went out for Marsha Hendler on Feb. 15, she rushed to her downtown San Antonio office to ride out the winter storm. Thankful to find the electricity and heat still on, she typed out an email to the elected officials who regulate her small, independent oil and gas company.

“I strongly urge you to make public statements, to develop a PR program around our current energy conditions,” Hendler wrote at 2 p.m. that day to the three members of the Texas Railroad Commission, according to an email obtained by The Texas Tribune and ProPublica. “Assure citizens that blending oil and gas production with green [energy] will keep Texas energy strong.”

It’s a sentiment that many in the oil and gas industry echoed during a crisis that forced millions to endure freezing weather for days without electricity and eventually led to the deaths of more than 100 people[1]. And even as Hendler typed, Railroad Commissioners Christi Craddick[2], Wayne Christian[3] and Jim Wright[4], all Republicans, had already begun to do what she had requested.

Emails, tweets and public statements from the state commissioners during the Texas power crisis show that the elected regulators expressed immediate worry about the storm’s impact on the image of the agency and the industry it regulates — the industry that funds much of their political campaigns. At times, commissioners retweeted or emphasized the same talking points published by the Texas Oil and Gas Association, one of the state’s largest trade associations. They testified at public hearings and made public statements pushing back against criticisms of the natural gas industry’s role in the February power outages. And in some cases, they attempted to redirect blame from the fossil fuel industry to wind power — a narrative that quickly gained traction among Texas Republicans on social media.

All sources of energy struggled to produce power during the storm, and the Texas power grid is particularly vulnerable to winter outages if natural gas-fired power plants don’t produce enough. But suddenly, fossil fuel-powered electricity had been labeled “reliables” by Texas politicians.

“Many including myself have warned for years about the dangers of relying too heavily on unreliable, intermittent forms of electric generation like wind and solar to meet the energy needs for 30 million Texans,” Christian[5] wrote in his newsletter to supporters Feb. 17. “The issue isn’t the existence of renewable energy, but that it has displaced reliable generation.”

Defending natural gas

Energy experts during and after the power outages have pointed to how the state’s reliance on natural gas-powered electric generation[6] created a perfect storm: Natural gas and other “thermal” sources of power, like nuclear energy and coal, make up more than 80% of the state’s projected power generation during the winter months, according to the Electric Reliability Council of Texas’s seasonal assessment of power resources[7].

While the raw amount of power generated by natural gas increased during the storm[8] as plants tried to match the rising demand, it was nowhere close to the amount of generation that should have been possible had the plants not experienced freezing components or natural gas fuel shortages.

Power plants initially tripped offline due to freezing conditions that plants were not built to withstand. Then some began to face fuel shortages. In many cases, there wasn’t enough natural gas flowing through the pipes during the storm to power plants, even if they could run. A decadeslong trend of electrifying natural gas fuel facilities meant that when ERCOT implemented power outages to prevent the complete collapse of the grid, the outages inadvertently choked off fuel for plants that could have returned power to homes.

The scramble to restore the fuel supply[9] was one of the major problems during the February crisis, and it caused some energy experts to call for reforms. James Robb, president and CEO of the North American Electric Reliability Corp., which has some authority to regulate power generators in the U.S., warned lawmakers[10] in March that the natural gas system “was not built or operated with electric reliability first in mind.”

But in their defense of natural gas, many Texas politicians cast blame elsewhere. Their most common target: wind-generated power, which also suffered serious failures due to frozen turbines but made up a significantly smaller share of the projected power for winter. Christian was among the loudest pushing that narrative: During a meeting Feb. 17[11], while the lights were still off across large parts of the state, he said that the storm showed the “dangers of subsidizing intermittent, unreliable energy” — an apparent reference to renewable energy like wind power.

After one Texan emailed each commissioner Feb. 17 asking what regulations the agency implemented leading up to the storm to ensure natural gas supply was reliable, Christian responded by again blaming renewable sources of energy. The storm would not have been so devastating had it not been for “decades of poor policy decisions prioritizing unreliable renewable energy sources at the expense of reliable electricity — something Texans now know is essential to our everyday lives,” he wrote, according to the email provided to the Tribune.

Connie Koval, the retiree who asked the question, said in an interview with the Tribune that the response made her upset. “It made me angry that they are continuing to spread false narratives,” Koval said. “He seemed to blame wind and solar.”

But it’s clear the commissioners saw a potential public relations crisis looming. After receiving the same inquiring email from Koval, Wright[12], who was elected to the Railroad Commission in November, forwarded the email to agency staff, saying the concerns would be “the greatest issue we will face from this event.”

“We need to be ready to respond with a good plan of action,” Wright wrote the morning of Feb. 18, the fourth day Texans were experiencing the power crisis. “I will provide the hurdles that are beyond our control in these regards when I am in the office next week as there are many.”

Kate Zaykowski, who received that email from Wright and works for him as his director of public affairs, said in an interview with the Tribune that Wright was referring to his concern about the public image of the agency. But she said he was also worried that the public would not understand what requiring the industry to prepare for extreme weather would entail, and was worried about the industry’s image as well.

“He believes, personally, that the oil and gas industry is important to Texas, and he wants the general public to understand why,” Zaykowski said. “He also believes that it’s important to regulate the industry.”

There are signs that the campaign to blame wind power might not have worked: A poll of registered voters in Texas conducted by the University of Texas at Austin’s Texas Politics Project and its Energy Institute[13], published Thursday, found that they cite the lack of winterization of power plants and the unprecedented nature of the storm as the top two factors in the power crisis. Only 35% of Texans surveyed pointed to an over-reliance on renewable energy as a major factor, compared with 64% of those surveyed who listed a lack of winterization of gas facilities.

Only 12% of those surveyed said they approved of the Railroad Commission’s response to the storm.

Hendler, the independent oil operator in San Antonio, acknowledged that using wind and solar energy is necessary to slow and mitigate the effects of climate change. But she said she believes the economy still depends on burning oil, gas and its derivatives for transportation, energy and other products, such as plastic. She said she’s concerned about an aggressive shift toward renewable energy that jeopardizes her industry and the larger state economy.

“Part of the job of the commission is a PR job, and I don’t think they do that well,” Hendler said. “I think that’s one of the reasons that the [oil] industry takes the hits that it does.”

Industry influence

The commissioners made their case far beyond emails and social media. In the days and weeks after the February power crisis, Christian published an opinion article in The Wall Street Journal defending[14] the use of fossil fuels and created a website dedicated to the talking points that he emailed to Koval and others. The site, Reliable Grid Now[15], says it seeks to “educate the general public and lawmakers about the importance of reliable energy” and urges the public to send letters against renewable energy subsidies to lawmakers signed, “Make Texas energy reliable again!”

In a statement, Christian told the Tribune that Reliable Grid Now is a project paid for by his campaign and is unrelated to his duties as a state regulator. He said when he ran for office, he made a promise to govern conservatively, support free markets and stand up for consumers.

“I don’t see myself as a spokesman for oil and gas, but I do have a responsibility to ensure our state’s natural resources are produced responsibly for the economic benefit of the citizens I represent,” Christian said.

Little more than a week after power was restored to most Texans, Craddick went to testify at the state Capitol, where she assured lawmakers that oil and gas did not need to be further regulated and pointed to power outages[16] for natural gas shortages during the storm. And testifying before a U.S. House Committee on Energy and Commerce in late March, she said the oil and gas industry helped Texas during the winter storm.

“I sit before you today to state that these operators were not the problem,” Craddick said. “The oil and gas industry was the solution.”

The industry was simultaneously making the same case. In a tweet Feb. 24, The Texas Oil and Gas Association wrote[17] that natural gas was “essential and indispensable” in heating and powering homes during the winter storm. The Texas Alliance of Energy Producers wrote in an opinion article for World Oil[18] that natural gas did the “heavy lifting” during the February storm, because it was needed to both heat homes and generate electricity. The group also blamed wind generation: “It wasn’t enough to meet the huge upward spike in demand, largely because electric power from wind generation was nowhere to be found.”

Craddick also retweeted and posted images by the Texas Oil and Gas Association.

“Natural gas stepped up to power the vast majority of electricity generation in Texas,” Craddick wrote in one tweet on Feb. 28[19], alongside a photo of a graph from the Texas Oil and Gas Association that showed power generation from natural gas increased during the February storm, without a comparison to the shortage of power the grid experienced.

In a statement to the Tribune, Craddick said she consumes information from a variety of sources, including TXOGA, and shares relevant and accurate information regardless of the source. She also wrote that the oil and gas industry is the most influential industry in Texas, and much of the state relies on its vitality.

“I support the industry’s continued success not only because of my role as a public servant at the Railroad Commission, but also as a Texan who appreciated the overwhelming economic vibrancy of our state,” Craddick said in a statement.

The industry supports Craddick and the other commissioners, too. Records show the commissioners’ campaigns received hundreds of thousands of dollars in 2020 from industry groups and people who work in oil and gas. Craddick alone received more than $ 200,000 from people specifically identified in campaign finance reports as involved in natural gas or oil and gas work.

Craddick and her father, state Rep. Tom Craddick[20], R-Midland, have long been financially tied to the industry in Texas, a relationship recently highlighted by The Washington Post[21], which reported that the two own and manage land across the state that generated more than $ 100,000 from Texas’ largest natural gas producers in 2019, according to state Ethics Commission records. In a statement, Christi Craddick said the Texas Ethics Commission laws ensure transparency of public officials and that she takes those laws seriously.

Virginia Palacios, executive director of Commission Shift, a newly formed nonprofit organization in Texas focused on environmental and consumer issues at the Railroad Commission, said the outsized influence of industry on the commission is hurting its ability to regulate, causing it instead to want to deflect blame for the power crisis.

“This is resulting in these industries buying the elections of the agencies that regulate them,” Palacios said. “It would have been nice if we had a regulator who looked at the data, looked at the recommendations and made sound management decisions based on that analysis. But what we have are [commissioners] who are elected trying to look good so that they can get reelected.”

Governor changes tune

The message has resonated with other state leaders and lawmakers. Gov. Greg Abbott[22], early in the storm, appeared to attempt to tamp down the narrative that renewable energy was solely to blame for the crisis.

In a tweet describing the situation[23] Feb. 15, Abbott wrote that “the ability of some companies that generate the power has been frozen. This includes the natural gas & coal generators.”

But he changed his tune by the time he appeared on Sean Hannity’s Fox News show[24] two days later. By then, a tweet by an energy author who promotes the use of fossil fuels had garnered significant attention[25] by claiming the “root cause” of the Texas power crisis was national and state policies that prioritize wind and solar energy over other sources. Alex Epstein, the author, had emailed those same talking points to Abbott’s office, email records first reported by NBC News show[26].

“Our wind and solar got shut down,” Abbott said on the show. “And that thrust Texas into a situation where it was lacking power on a statewide basis. … As a result, it shows fossil fuels are necessary for the state of Texas as well as other states.”

Weeks later, an Abbott spokesperson told the Tribune[27] that the governor is treating all power sources equally as he pushes for reform of the electricity grid that covers much of the state.

Some bills identified by lawmakers as high priorities seek to place new costs on renewable power[28] or take preventive strikes at climate action plans by cities.

At the annual Energy Day at the Capitol on March 24, state leaders and regulators touted the state’s oil and gas production and largely ignored the February power outages. They also criticized renewable energy. Christian again reiterated his concern about the country’s investments in renewable energy, which he called “undependable.”

“We’re putting most of our tax dollars into the ‘undependables’ at the cost and risk to lives and to the ‘dependables’ — oil, gas and coal,” Christian told Todd Staples, president of the Texas Oil and Gas Association, during a discussion moderated and hosted by the industry group.

Abbott promoted a bill that would stop cities from banning natural gas[29] as a fuel source for heating homes and other buildings. Staples claimed that the oil and gas industry would lead the U.S. to a “cleaner” future. Both Christian and Abbott hammered Democrats and the Biden administration during the event.

“With regard to the energy sector in Texas, and across the United States, it’s changed because of the new administration that’s seeking to impose these Green New Deal policies, Green New Deal policies that threaten fossil fuel production in the state of Texas like what we are accustomed to,” Abbott said.

“But something else that we are accustomed to is fighting back, and protecting the fossil fuel industry in Texas,” he said.

Lexi Churchill, a research reporter for the Texas Tribune/ProPublica investigative unit, contributed reporting.

Disclosure: The Texas Oil and Gas Association, Texas Alliance of Energy Producers and University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribunes journalism. Find a complete list of them here[30].


  1. ^ more than 100 people (www.texastribune.org)
  2. ^ Christi Craddick (www.texastribune.org)
  3. ^ Wayne Christian (www.texastribune.org)
  4. ^ Jim Wright (www.texastribune.org)
  5. ^ Christian (www.texastribune.org)
  6. ^ on natural gas-powered electric generation (www.texastribune.org)
  7. ^ seasonal assessment of power resources (www.ercot.com)
  8. ^ increased during the storm (www.eia.gov)
  9. ^ scramble to restore the fuel supply (www.texastribune.org)
  10. ^ warned lawmakers (www.texastribune.org)
  11. ^ During a meeting Feb. 17 (www.texastribune.org)
  12. ^ Wright (www.texastribune.org)
  13. ^ poll of registered voters in Texas conducted by the University of Texas at Austin’s Texas Politics Project and its Energy Institute (texaspolitics.utexas.edu)
  14. ^ The Wall Street Journal defending (www.wsj.com)
  15. ^ Reliable Grid Now (www.reliablegridnow.com)
  16. ^ pointed to power outages (www.texastribune.org)
  17. ^ Texas Oil and Gas Association wrote (twitter.com)
  18. ^ wrote in an opinion article for World Oil (www.worldoil.com)
  19. ^ one tweet on Feb. 28 (twitter.com)
  20. ^ Tom Craddick (www.texastribune.org)
  21. ^ recently highlighted by The Washington Post (www.texastribune.org)
  22. ^ Greg Abbott (www.texastribune.org)
  23. ^ tweet describing the situation (twitter.com)
  24. ^ on Sean Hannity’s Fox News show (video.foxnews.com)
  25. ^ had garnered significant attention (twitter.com)
  26. ^ email records first reported by NBC News show (www.nbcnews.com)
  27. ^ told the Tribune (www.texastribune.org)
  28. ^ place new costs on renewable power (www.texastribune.org)
  29. ^ stop cities from banning natural gas (www.texastribune.org)
  30. ^ list of them here (www.texastribune.org)

Erin Douglas and Mitchell Ferman