Biden's crypto cop taunts Republicans

House Republicans wanted the spotlight this week to sell a new plan to revamp the rules for crypto. SEC Chair Gary Gensler — President Joe Biden's top financial market cop — is stomping on their rollout.

The SEC on Monday and Tuesday announced major lawsuits against the world's largest digital currency exchange, Binance, and the largest U.S.-based exchange, Coinbase, in an escalation of a crackdown on companies that Gensler says are flaunting investment rules and putting consumers at risk.

The timing has huge political weight. Gensler is exerting his authority like never before over what he calls a "Wild West" market just as his opponents on Capitol Hill and in industry rally to box in his agency.

Gensler brought the cases as House Republicans on Tuesday planned to hold a hearing — featuring Coinbase's top lawyer — to bolster proposed legislation that would overhaul crypto rules by reining in the SEC and shifting greater responsibility to the much smaller Commodity Futures Trading Commission.

"It is an interesting coincidence," Rep. French Hill (R-Ark.), one of the authors of the new legislation, said in an interview after the Binance case was filed.

The dueling moves by the crypto industry's biggest Washington foe and its most powerful allies underscore the government’s extreme divide over how to police the market for digital tokens. The big question for the crypto world is how long it can continue to fend off Biden-era regulators through the courts until the political winds shift more in its favor.

“We don't need more digital currency," Gensler said on CNBC on Tuesday, just before House Republicans started the hearing showcasing their crypto plan. "We already have digital currency. It's called the U.S. dollar. It's called the euro. It's called the yen."

Crypto critics like Gensler, emboldened after the collapse of FTX last year exposed alleged fraud and mismanagement, are doubling down on the idea that digital asset startups have run amok for too long and must be forced to abide by existing financial regulations.

“We should be not assuming that crypto has some innovation payout right around the corner,” said Mark Hays, a senior policy analyst at Americans for Financial Reform who advocates for tougher digital asset regulation.

Crypto boosters and other allies — led by congressional Republicans but also including a number of Hill Democrats — are working to set up a new regulatory regime that's more accommodating to digital currencies.

The new House GOP bill — drafted by leaders of the Financial Services and Agriculture Committees — wouldn’t eliminate the SEC’s role in the market but would impose firmer guardrails on the agency in a bid to give crypto startups a clear pathway to government regulation. In doing so, the bill would give the CFTC a significant new say over a sizable chunk of the industry. It’s a legal arrangement custom-fit for crypto that companies like Coinbase have long sought.

“Of course, the chairman has been on an enforcement binge, I would say since the first of the year, which has always struck me as a bit like covering for a lack of any successful intervention on FTX during 2022,” said Hill, a senior member of the Financial Services Committee. “He chases down Kim Kardashian about promoting crypto but does nothing about actually working with companies to make sure they’re in compliance.”

Binance and Coinbase will no doubt fight Gensler to preserve their businesses, but he has the upper hand in the existential struggle. It could take Congress years to coalesce around a major regulatory revamp that makes life easier for crypto, even if Republicans can start to attract bipartisan support.

It’s more likely in the near term that courts will dictate the direction of U.S. crypto policy, as companies fight back against SEC enforcement actions.

“This is the reason why we’re here,” CFTC Chair Rostin Behnam, who is supportive of the GOP proposal’s broad strokes but wants to see some changes, said Tuesday when asked about the SEC cases. “There is confusion.”

A number of leading Democrats have already signaled they will rally around Gensler and his agency, meaning crypto's long-sought win to prove its legitimacy — embodied by the House Republican bill — will likely be short-lived.

“It’s designed to make sure the SEC can’t police this market,” Rep. Brad Sherman of California, a senior member of the Financial Services Committee, said. “What [crypto executives] want is phony regulation. They want a patina of regulation.”

Sam Sutton contributed to this report.

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‘If the Kelce family can make it work ... ’: Biden welcomes Super Bowl champion Kansas City Chiefs

President Joe Biden hosted the Kansas City Chiefs at the White House for the first time on Monday to celebrate their Super Bowl win — a visit that also made up for 2020 when they missed out on a visit because of the Covid-19 pandemic.

“It’s been a long wait to stand before. Again, we are fired up. We missed the first one due to Covid, but we are here strong. Kansas City strong,” Andy Reid, the team’s head coach, said during remarks at the White House.

The Chiefs beat the Philadelphia Eagles 38-35 in Super Bowl LVII in February — much to first lady Jill Biden’s dismay, the president said during the event.

“Jill still doesn’t even believe the Eagles player who acknowledged the holding penalty,” Biden joked, referencing a controversial call that Eagles fans argued cost their team the game. “But I figure if the Kelce family can make it work … then there’s hope, there’s hope for the rest of us,” he added.

Travis Kelce and Jason Kelce played on opposing teams during the latest Super Bowl, the first brothers to ever face off in the NFL championship.

Despite his Philly ties, Biden congratulated the team on building a successful “dynasty,” in the face of those who discounted the team at the beginning of the season.

“Somehow, last summer, people counted you guys out. But you kept the faith,” Biden said.

He singled out Chiefs quarterback Patrick Mahomes, calling him one of the greatest quarterbacks of his generation — and possibly any generation. And he praised Travis Kelce as “one of the greatest tight ends ever.”

“You’ve shown the power of one of the most elusive things in the world: unity,” Biden said.

“That’s the power of this team. The power of sports. And, I might add, it’s the power of our country,” he later added.

Both the president and Reid recognized Norma Hunt — the wife of the late Kansas City Chiefs founder Lamar Hunt, and the only woman who had attended every Super Bowl — who died recently.

The Chiefs’ visit on Monday marked the first time an NFL team has visited the White House since the Tampa Bay Buccaneers in 2021. The Los Angeles Rams did not visit in 2022.

“Congrats to the Kansas City Chiefs on their Super Bowl win and to MVP @PatrickMahomes on leading the team to victory,” Biden said on Twitter after the game. “Through injury and obstacles, you showed grit and true resilience.”

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Shein tries to overhaul its image as Washington scrutiny grows

Shein, the world’s largest online fashion retailer, is out to change its negative reputation in Washington.

The e-commerce site popular with Gen Z is one of the most prominent purveyors of “fast fashion,” known for selling a wide variety of cheap dresses, skirts and shirts, many under $10. But the company, which was founded in China in 2008, has been assailed by allegations that its clothes are made with the forced labor of Chinese Uyghurs, an oppressed minority group, and that its business model intentionally evades American tariffs.

For years, those charges went largely unanswered by a company whose executive team was rarely seen, let alone made available to answer questions. But now the e-commerce giant is going on the offensive as lawmakers probe its supply chains, weigh new tariffs that would hit its shipments and potentially throw up roadblocks to its rumored initial public offering. The firm has hired Washington lobbyists for the first time and is talking up its new status as a Singapore-based company after relocating its headquarters there from Nanjing. And its executives are offering previously unreported evidence to the press that they say clears the firm of human rights violations related to its cotton supply.

“We are committed to respecting human rights and adhering to local laws in each market we operate in,” said Peter Pernot-Day, Shein’s head of strategy and corporate affairs.

The new lobbying effort underscores how geopolitical tensions are squeezing Chinese companies that rely on markets in the West, where they face rising scrutiny from both governments and consumers. In the U.S., Chinese companies have become a target for politicians looking to feed off Americans’ anti-China sentiment. They’re also potential losers in the Biden administration’s push to diversify the country’s supply chains away from China, as well as efforts to change the law that allows Shein’s products and other small shipments from China to enter the U.S. duty-free.

Shein, specifically, is under the microscope for its alleged reliance on supply chains that run through the Xinjiang region of China, the site of widespread human rights abuses against the Uyghur minority, after the U.S. enacted a ban on imports from the region in 2021.

This spring, The House Select Committee on China sent a letter to Shein and a handful of other fast fashion retailers, demanding information about their supply chains and any products imported from Xinjiang. Separately, a group of two dozen lawmakers wrote to the Securities and Exchange Commission, asking it to block any Shein IPO if the company cannot prove it does not use forced labor.

Policymakers’ concern about Shein rose last year after Bloomberg reported that two lab tests showed the firm’s clothes were made with Xinjiang cotton — potentially making Shein’s shipments subject to detention at U.S. ports of entry.

Shein did not comment on the test results at the time and still refuses to weigh in on those reports. But now, the firm says its own, previously unreported third-party analyses have shown that the vast majority of its cotton does not come from Xinjiang. (The company also says that only a small proportion — about 4 percent — of its products sold in the U.S. are made of cotton, as opposed to synthetic fabrics.)

Between June 2022 and the beginning of this year, Shein says it had nearly 2,000 separate tests run on its yarn, fabric and finished products — from all 60 of the mills that supply its cotton. Those tests revealed that nearly 98 percent of its cotton did not come from Xinjiang or other regions blocked under U.S. law — while 2.1 percent was found to be sourced from the northwest Chinese region or other “unapproved” places.

“In all such [positive] cases, production of affected products was stopped and any products containing cotton associated with the positive tests were removed for sale,” a spokesperson said.

The testing was done by New Zealand supply chain tracing firm Oritain, which says it can track the origin of cotton fibers down to individual farms. Separate from the Shein work, the company has also been contracted by Customs and Border Protection to assist with the U.S. government’s own supply chain tracing.

Oritain confirmed Shein’s cotton test results and said that they are significantly better than the fashion industry on average. Each year, the firm tests more than a thousand cotton samples from across the industry. In its latest round, about 12 percent of cotton samples tested positive for an “unapproved” region, said Rupert Hodges, chief commercial partner at Oritain.

Shein is “actually outperforming that benchmark very well,” Hodges said.

Determining the source of Shein’s synthetic fabrics like polyester is more difficult. Oritian says testing for polyester is still in its “infancy” and that there is “currently no scientifically viable means of performing origin testing on polyester fibers,” though it is working with Shein and other partners to advance those efforts.

Even so, Shein says that its polyester fabrics aren’t from Xinjiang. The company has no manufacturers in the region, and it generally purchases its polyester “from vendors in the Guangdong region of South Eastern China, as do many garment producers worldwide,” a spokesperson said.

“Regardless of the material used by our manufacturers, all manufacturers must agree to our Supplier Code of Conduct and agree to adhere to SHEIN's Responsible Sourcing Policy, both of which prohibit the use of forced labor,” the spokesperson added.

Chapin Fay, director of the advocacy group Shut Down Shein, said the tests have not assuaged his group’s concerns: “We have little confidence in Shein and what they claim,” Fay said.

Shut Down Shein has bought advertising in national media outlets (including POLITICO) criticizing Shein and met with lawmakers to press them to crack down on the firm. The group has so far kept its members anonymous but bills itself as a group of “well-known brands, individuals and human rights groups” opposed to Shein’s business model.

The fabric testing is only part of Shein’s new charm offensive. It has also sought out media attention for its new designer programs to counter charges that it steals intellectual property from independent fashion designers online, and it is planning future campaigns to counteract the reputation that its fast-fashion model is wasteful and fueling environmental destruction.

To assist in the rebranding campaign, Shein hired its first Washington lobbyists from Akin Gump and Hobart Hallaway and Quayle, two prominent Washington firms, last year. Still, the campaign is in its early stages, with lobbyists working on “general education” on Shein’s business for policymakers, as well as tax and trade issues related to its business, according to disclosures. The firm has also spent less than many firms of its size, just over half a million dollars last year and in the first quarter of 2023.

Despite the new public overtures, many of Shein’s critics find its claims hard to swallow. Rep. Mike Gallagher (R-Wis.) argued that Shein’s own cotton test results show that it still has work to do to weed out forced labor in its supply chain.

“I’m not sure that mostly-not-made-with-slave-labor is a good advertisement,” said Gallagher, chair of the House Select Committee on China, which has opened an investigation into Shein and other suspected trade cheats.

Critics also point out that the firm will have to open itself up to further scrutiny if the rumors of its interest in an initial public offering in the U.S. are true. Pernot-Day said that the company “currently has no plans for an IPO.”

Shein “is going to have a lot of disclosure requirements if they choose to list on our stock exchanges,” said Rep. Raja Krishnamoorthi, the top Democrat on the House China committee. “I think this is a good dry run for them to really come clean, so to speak, and make sure that everybody knows what’s going on regarding their supply chain.”

Even if Shein is successful in convincing its critics that its supply chains do not run through Xinjiang, the company has other issues in Washington. China hawks in Congress accuse it of using a trade loophole known as de minimis — no tariffs on packages under $800 — to escape duties on Chinese imports. A bipartisan group of House trade lawmakers has said they want to address that issue this year, potentially by lowering or eliminating the duty-free threshold.

“Forced labor is only one part of the problem,” said a spokesperson for Rep. Earl Blumenauer, the head Democrat on the Ways and Means trade subcommittee, who has pushed legislation to prevent Chinese imports from receiving duty-free treatment. That loophole “puts domestic producers at a competitive disadvantage compared to their foreign counterparts like Shein.”

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Indian opposition leader Gandhi calls on U.S. audience to stand up for ‘modern India’

NEW YORK — Indian opposition leader Rahul Gandhi pressed his criticism of the country’s leadership in a speech Sunday, calling for Indians in the U.S. and back home to stand up for democracy and the Indian constitution.

Gandhi, a sharp critic of Indian Prime Minister Narendra Modi who was expelled from Parliament, accused Modi and his Bharativa Janata Party (BJP) of dividing the country and failing to focus on important issues such as unemployment and education.

“To be nasty to people, to be arrogant, to be violent, these are not Indian values,” Gandhi, 52, told a crowd of about 700 at the Indian Overseas Congress USA event at the Jacob Javits Center in Manhattan. He spoke just after a minute of silence recognizing a massive train derailment in eastern India that killed 275 people and injured hundreds more.

Gandhi has been on a three-city tour of the United States, including speaking engagements at Stanford University in California and the National Press Club in Washington, D.C.

Meanwhile, U.S. congressional leaders have invited Modi to address a joint meeting of Congress later this month. House Speaker Kevin McCarthy, Senate Majority Leader Chuck Schumer and other leaders announced the address as an “opportunity to share your vision for India’s future and speak to the global challenges our countries both face.”

Grandson of former Indian Prime Minister Indira Gandhi, Rahul Gandhi is a member of the Indian National Congress party. He is considered to be Modi’s main challenger in the upcoming 2024 elections.

“Modern India cannot exist without our constitution and our democracy,” he said Sunday. He also urged a stronger partnership between India and the U.S. to offset China’s influence.

“One of the things we have to think about is the bridge between India and the United States,” he said. “How do we compete with the challenge the Chinese have placed on the table,” he asked, specifically citing issues of mobility and the world’s energy supply.

The Congress Party defeated the BJP in recent state elections in the Himachal Pradesh and Karnataka states, wins that came after a series of state elections defeats after Modi became India’s prime minister in 2014. Gandhi now holds no official position in his party. He gave up the post of party president after his severe defeats by Modi’s Hindu nationalist party in 2019 national elections, though his supporters hope the more recent results will impact the country’s 2024 national elections, which are likely to be held before May.

Gandhi suffered a serious setback in March when a court convicted him in a criminal defamation case for mocking Modi’s surname, a decision that led to him being expelled from parliament. He could lose his eligibility to run for a parliamentary seat for the next eight years if an appeals court doesn’t overturn his conviction. The conviction came in connection with a speech he gave in 2019.

Gandhi, who is not related to Mahatma Gandhi, also invoked the assassinated Indian leader’s name several times during his speech, praising his model of non-violence.

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