The US Securities and Exchange Commission (SEC) reportedly met crypto exchange FTX and former CEO Sam Bankman-Fried several times before the cryptocurrency firm filed for bankruptcy. SEC President Gary Gensler has reportedly been helping FTX with legal loopholes. However, a new report points to a contradictory view.
Gensler’s meeting with Sam Bankman-Fried and FTX
After the filing of the FTX bankruptcy filing, rumors emerged accusing the Chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, of aiding former FTX CEO Sam Bankman-Fried and his bankrupt exchange with “legal loopholes to obtain a regulatory monopoly.” Some people even speculated that the head of the SEC was about to issue a no-action letter to FTX.
Gensler’s calendar shows that he met Bankman Fried in March. According to the SEC meeting note, “Members of President Gensler’s team met with IEX and FTX staff to discuss Holding of digital asset securities by intermediaries-dealers for special purposes, including the unique risks associated with holding digital asset securities and conditional no-action mitigation discussed in the statement.”
However, Charles Gasparino from Fox Business explained On Twitter Saturday that “contrary to speculation” about Gensler’s bid to give former FTX CEO Sam Bankman-Fried a regulatory monopoly on the crypto exchange:
The March meeting between the two sides was described by someone who attended a “45 minute talk by Gensler” about what he wanted out of a cryptocurrency exchange.
The journalist noted that the SEC chief not only made promises to Bankman-Fried, FTX and IEX, but also “instructed them to provide more in the manner of disclosure and otherwise to the SEC about their model.”
He continued, “Follow-up meetings with the SEC continued until around the time the FTX exploded but no SEC approval was indicated.” “House Republicans likely hold hearings on FTX given Bankman Fried’s political leanings by calling Gensler as a witness he might have to think twice. Sources say Gensler told Brad Katsuyama and Bankman-Fried he wanted strict oversight and standards and there was no guarantee with consent.”
However, several people on social media expressed their belief that Gensler or other SEC employees were helping FTX. Some suspect that this is because Bankman-Fried is a major donor to the Democratic Party. The former FTX chief was the Democrats’ second-largest donor in 2021-22, donating $39.8 million — second only to George Soros, according to political donor data from Open Secrets.
Referring to the sanctioning of the Ethereum crypto shuffling service Tornado Cash, privacy activist and whistleblower Edward Snowden tweeted:
Children are punished and arrested by the White House for the “crime” of building privacy gadgets to protect you, while the “Regulators” were quietly roaming with the thieves who just robbed 5 million people. the difference? The thieves were major political donors.
Congressman Tom Emer (R-MN) tweeted Thursday: “Reports to my office allege he was helping SBF and FTX work on legal loopholes to get a regulatory monopoly. We’re looking into this.”
Last week, Gensler confirmed during an interview on CNBC that he had met with Bankman-Fried. The SEC chief said: “I think we’ve been very clear in these meetings… Non-compliance is not going to work, and the public will be hurt.”
The head of the Securities and Exchange Commission (SEC) has often been criticized for his enforcement-centric approach to regulating the cryptocurrency industry. Gensler has repeatedly said that cryptocurrency trading and lending platforms should “step in,” talk to the Securities and Exchange Commission, and sign up. However, Ripple CEO Brad Garlinghouse said in September last year that instead of working with the crypto industry, the SEC “is using its corporate meetings as a lead generation for its enforcement actions.” His company is currently engaged in an ongoing lawsuit with the Securities and Exchange Commission regarding the sale of XRP.
In addition, several news outlets have reported that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating FTX for alleged mishandling of client funds. In May, Gensler warned that crypto exchanges often trade against their clients.
Do you think the SEC and Gensler were working with crypto exchange FTX and Sam Bankman-Fried on legal loopholes? Let us know in the comments section below.
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