It seems inevitable any time a large scandal breaks, especially a multibillion-dollar corporate collapse with thousands of aggrieved victims. The first reaction is to blame the regulator for failing to prevent the misconduct that led to the implosion. How did they not see this coming? Were they asleep at the wheel?

The collapse of cryptocurrency platform FTX has prompted just a round of criticism, much of it focused on the Securities and Exchange Commission and its chairman, Gary Gensler. Is this criticism of the SEC justified? And if not, where should the finger be pointed?