Conflicting information emerges about SEC helping bankrupt FTX through legal loopholes

The U.S. Securities and Exchange Commission (SEC) reportedly met with the FTX exchange and its former CEO Sam Bankman-Fried on several occasions before the crypto-currency company filed for bankruptcy. SEC Chairman Gary Gensler reportedly helped FTX find legal loopholes.

Gensler’s meeting with Sam Bankman-Fried and FTX

Following the bankruptcy filing of crypto-currency exchange FTX, rumors have surfaced accusing U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler of helping former FTX CEO Sam Bankman-Fried and his failing exchange with “Legal loopholes to obtain a regulatory monopoly“. Some people even speculated that the SEC boss was about to issue FTX a certificate of invalidity.

Gary Gensler’s own calendar shows that he met with Bankman-Fried in March. According to an SEC meeting note, “members of President Gensler’s staff met with IEX and FTX personnel to discuss custody of digital asset securities by special purpose broker-dealers, including the unique risks associated with custody of digital asset securities and the conditional exemption from action discussed in the statement.

However, Charles Gasparino of Fox Business explained on Twitter Saturday that “contrary to speculation“about Gary Gensler seeking to give former FTX CEO Sam Bankman-Fried a regulatory monopoly on a crypto-currency exchange:

The March meeting between the two parties was described by one person in attendance as “a 45-minute lecture by Gensler” on what he wants from a crypto-currency exchange.

Not only did the SEC chairman make no promises to Bankman-Fried, FTX and IEX, but he also “ordered them to provide much more information to the SEC about their model“, noted the reporter.

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Follow-up meetings with the SEC continued until FTX imploded, but no SEC approval was reported“, he continues. “The House GOP, which is likely to hold hearings on FTX given Bankman-Fried’s Democratic political leanings, calling Gensler as a witness might think twice. Sources say Gensler told Brad Katsuyama & Bankman-Fried that he wanted strict oversight, standards & there was no guarantee of approval.

Nevertheless, many people expressed on social media their belief that Gensler or other SEC staff members were helping FTX. Some suspected it was because Bankman-Fried is a major Democratic donor. The former FTX chief was the second-largest donor to Democrats in 2021-22, with $39.8 million – just behind George Soros, according to Open Secrets’ political donor data.

Referring to the sanctioning of the Ethereum crypto-mixing service Tornado Cash, privacy activist and whistleblower Edward Snowden tweeted:

The White House is sanctioning and arresting kids for the “crime” of creating privacy tools to protect you, while the “regulators” were quietly chumming with the thieves who just robbed 5 million people. The difference? The thieves were big political donors.

Congressman Tom Emmer (R-MN) tweeted Thursday, “According to reports to my office, he was helping SBF and FTX work on legal loopholes to gain a regulatory monopoly. We are looking into this matter.

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Last week, Gensler confirmed in an interview on CNBC that he had indeed met with Bankman-Fried. The SEC chairman said, “I think we were clear in those meetings … non-compliance is not going to work, the public is going to suffer.

The SEC chairman has often been criticized for his enforcement-centric approach to regulating the crypto industry. Gensler has repeatedly stated that crypto exchange and lending platforms should “come“, talk to the SEC and get registered. However, Ripple CEO Brad Garlinghouse said in September of last year that instead of working with the crypto-currency industry, “the SEC is using its meetings with companies to generate leads for its enforcement actions“. His company is currently involved in an ongoing lawsuit with the SEC over the sale of euro banknotes. XRP.

In addition, several news outlets have reported that the SEC and Commodity Futures Trading Commission (CFTC) have been investigating FTX for alleged mismanagement of customer funds. In May, Gary Gensler warned that crypto-currency exchanges often trade against their customers.

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