The US SEC reportedly met with crypto exchange FTX and former CEO Sam Bankman-Fried multiple times before the crypto company declared bankruptcy.
SEC Chairman Gary Gensler was rumored to be assisting FTX with legal loopholes.
A new report, however, suggests a different point of view.
Following the bankruptcy filing of cryptocurrency exchange FTX, reports have surfaced accusing Gary Gensler for assisting former FTX CEO Sam Bankman-Fried and his bankrupt exchange with "legal loopholes to obtain a regulatory monopoly."
Some suspected that the SEC chairman was poised to issue a no-action letter to FTX.
As per Gensler's own schedule, he did meet with Bankman-Fried in March. According to an SEC meeting note, “In order to address custody of digital asset securities by special purpose broker-dealers, including the unique risks connected with custody of digital asset securities and the conditional no-action relief indicated in the statement, representatives of Chair Gensler's office met with personnel from IEX and FTX.”
However, Fox Business' Charles Gasparino stated on Twitter Saturday that "contrary to rumors," Gensler is looking to offer former FTX CEO Sam Bankman-Fried a regulatory monopoly on a crypto exchange.
Follow-up meetings with the SEC proceeded until roughly the time FTX imploded, he said, but no SEC approval was conveyed. Given Bankman-Democratic Fried's political leanings, House Republicans considering holding FTX hearings may want to reconsider summoning Gensler as a witness. As per sources, Gensler told Brad Katsuyama and Bankman-Fried that he needed stringent control and standards and that permission was not guaranteed.
Nonetheless, many people have stated their conviction on social media that Gensler or other SEC staff members were assisting FTX. Some speculated that it was because Bankman-Fried is a major Democratic Party donor. According to Open Secrets political contributor data, the former FTX Boss was the Democrats' second-highest fundraiser in 2021-22, donating $39.8 million – second only to George Soros.
Edward Snowden, a privacy activist, and whistleblower tweeted in response to the sanctioning of Ethereum crypto mixing service Tornado Cash:
“While regulators were silently commiserating with the burglars who had just plundered 5 million people, the White House sanctioned and imprisoned children for the 'crime' of designing privacy safeguards to protect you. What is the distinction? The thieves were major political contributors.”
Congressman Tom Emmer (R-MN) tweeted on Thursday, "Reports to my office claim he was assisting SBF and FTX in obtaining a regulatory monopoly" This is being investigated."
During an interview with CNBC last week, Gensler stated that he met with Bankman-Fried. The SEC chairman stated, "I believe we've been clear in these discussions... Noncompliance will not work, and the public will suffer as a result."
The SEC chairman has frequently been chastised for his enforcement-focused approach to regulating the cryptocurrency business. Gensler has stated repeatedly that crypto trading and lending platforms should "come in," speak with the SEC and register.
However, Ripple CEO Brad Garlinghouse stated in September of last year that "the SEC is using its meetings with firms as a lead generating for their enforcement operations," rather than collaborating with the crypto industry. His company is currently embroiled in a legal battle with the SEC over the selling of XRP.
Furthermore, multiple news outlets reported that the SEC and the Commodity Futures Trading Commission (CFTC) are looking into FTX for suspected mismanagement of customer funds. Gensler warned in May that cryptocurrency exchanges frequently trade against their consumers.
Do you believe the SEC and Chair Gensler were collaborating on legal loopholes with crypto exchange FTX and Sam Bankman-Fried? Please share your thoughts in the comments box below.
Read also: Crypto Titans Under Fire: Bankman-Fried and Do Kwon Face Criminal Allegations
