The United States Securities and Exchange Commission (SEC) is said to have met with crypto exchange FTX and former CEO Sam Bankman-Fried several times before the crypto company filed for bankruptcy. SEC Chairman Gary Gensler is rumored to be helping FTX with regulatory loopholes. However, a new report points to a conflicting view.
Gensler’s Encounter with Sam Bankman-Fried and FTX
After crypto exchange FTX filed for bankruptcy, rumors surfaced accusing US Securities and Exchange Commission (SEC) Chairman Gary Gensler of helping former FTX CEO Sam Bankman- Fried and his bankrupt exchange had “a legal loophole to obtain a regulatory monopoly. “Some have even speculated that the boss of the SEC is about to issue FTX a letter of injunction.
Gensler’s private calendar shows that he met with Bankman-Fried in March. According to the SEC meeting notes, “members of Chairman Gensler met with IEX and FTX staff to discuss custody. brokers’ digital asset securities – special purpose brokers, including the unique risks associated with the custody of digital asset securities and conditions of no action relief is discussed in the statement. “
However, Fox Business’ Charles Gasparino explained on Twitter Saturday that “Contrary to speculation” Gensler is looking to grant former FTX CEO Sam Bankman-Fried exclusive management rights on an exchange. Cryptocurrency trading:
The March meeting between the two was described by one attendee as a ’45-minute lecture by Gensler’ on what he wants from a crypto exchange.
Not only did the SEC chairman not make promises to Bankman-Fried, FTX and IEX, but he also “ordered them to provide more in a disclosure manner, etc. to the SEC about their model,” the journalist noted.
“Further meetings with the SEC continued until near the time of the FTX explosion but there was no sign of SEC approval,” he continued. “House GOP’s ability to hold hearings on FTX due to Bankman-Fried’s Dem’s political leanings by calling Gensler as a witness may be subject to a second thought. Sources say Gensler told Brad Katsuyama & Bankman-Fried he wanted close scrutiny, standards, and no guarantees of approval.
However, many people have expressed on social media their belief that Gensler or other SEC employees are helping FTX. Some suspect that’s because Bankman-Fried is a major donor to the Democratic Party. The former FTX chief is the second-largest donor to the Democratic Party for 2021-22, donating $39.8 million — second only to George Soros, according to political sponsor Open Secrets data.
Referring to the sanctioning of Ethereum crypto mixing service Tornado Cash, privacy activist and whistleblower Edward Snowden tweeted:
White House sanctions and arrest of children for ‘crime’ of building privacy protection tools to protect you, while ‘regulators’ are quietly worrying about moderate thieves took 5 million people. Difference? Thieves are major political donors.
Congressman Tom Emmer (R-MN) tweeted Thursday: “Reports to my office allege that he is helping SBF and FTX work through regulatory loopholes to gain regulatory monopoly. We are looking into this issue. “
Last week, Gensler confirmed in an interview on CNBC that he had met with Bankman-Fried. “I think we’ve been clear in these meetings… non-compliance won’t work, the public will get hurt,” said the SEC chairman.
The SEC chairman is often criticized for his enforcement-focused approach to regulating the crypto industry. Gensler has repeatedly said that cryptocurrency trading and lending platforms should “get in”, talk to the SEC and sign up. However, Ripple CEO Brad Garlinghouse said last September that instead of working with the crypto industry, “the SEC is using their meetings with companies as the lead.” for their enforcement actions”. His company is currently engaged in an ongoing lawsuit with the SEC over the sale of XRP.
Additionally, several news outlets reported that the SEC and the Commodity Futures Trading Commission (CFTC) were investigating FTX for alleged mishandling of client funds. In May, Gensler warned that cryptocurrency exchanges often trade against their customers.