Did FTX Execs Attempt to Steer US Regulations in Their Favor Before Firm’s Implosion?
- November 18, 2022
Watchdog Investigation Seeks to Uncover Failed Crypto Business Leveraging Political Connections to Sway Fed Regulators
Today, Protect the Public’s Trust announced an investigation into possible attempts by executives at FTX to influence government regulations and oversight prior to the firm’s rapid collapse. Customers, employees, and investors stand to lose tens of billions of dollars from the enterprise’s precipitous failure.
Prior to the exchange’s implosion, FTX founder Sam Bankman-Fried was known as much for his political activity and connections as for his role at what was thought to be one of the leading companies in the budding cryptocurrency market. Media reports indicate that Bankman-Fried may have used his connections to arrange a meeting with Securities and Exchange Commission (SEC) Chairman Gary Gensler. Bankman-Fried reportedly discussed his “idea for a new SEC-approved crypto trading platform” that would given FTX “a jump-start on the competition with a trading platform explicitly meeting the SEC standards.”
PPT is seeking information from the SEC, Commodity Futures Trading Commission (CFTC), and Consumer Financial Protection Bureau (CFPB) regarding communications and meetings that occurred between Bankman-Fried and other executives at FTX with the chair, commissioners, and other high-ranking officials at these agencies. Each of these agencies has expressed interest in regulating the crypto market and PPT is working to expose whether Bankman-Fried, who bragged of his political activity but whose business apparently lacked many basic controls, was able to leverage his connections to steer regulation and oversight to the benefit of his own interests.
“At the root of the American public’s declining trust in its government is the belief that it is an insider’s game in which the wealthy, powerful, and well-connected are able to manipulate its workings to their advantage,” Michael Chamberlain, Director of Protect the Public’s Trust, said. “While the founder of FTX was being lionized and using his riches to influence the political scene, his business appeared to be a house of cards. The American public needs to know if his political maneuverings affected the regulatory process, which is intended to protect the American public, not advance the interests of insiders.”