Treasury Stonewalling Investigation into FTX Lobbying Records
- December 9, 2022
Agency throws roadblock in the way of search for communications between senior Biden officials and major donor
Government of the people, by the people, and for the people. That vision of America is increasingly fading in the rearview mirror.
After the precipitous collapse of crypto firm FTX, Protect the Public’s Trust began an investigation into attempts by founder Sam Bankman-Fried (SBF), “the second-largest Democratic donor this election cycle by a longshot” and known as much for his political activity and connections to the Biden Administration as for his business acumen, to influence agencies seeking to regulate the crypto industry. Though PPT has never been charged by a federal agency for processing any of the hundreds of Freedom of Information Act (FOIA) requests we have submitted, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) denied our fee waiver for these records. FinCEN justified this decision by absurdly claiming that releasing these records – records that could reveal efforts by a political insider to swing regulations in favor of his failing ventures – is not in the “public interest.” Treasury and FinCEN apparently believe, contrary to the administration’s public proclamations to be the most transparent in history, that the public does not have the right to know. Of course, we plan to appeal.
Prior to the exchange’s implosion, 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 have given FTX “a jump-start on the competition with a trading platform explicitly meeting the SEC standards.”
PPT has sought information from a number of financial regulators that SBF allegedly communicated with on behalf of FTX while potentially defrauding millions of customers. 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.
“The public is still trying to understand the scope and audacity of FTX’s bankruptcy and Sam Bankman-Fried’s role in what may have been one of the largest frauds in history,” stated Michael Chamberlain, Director of Protect the Public’s Trust. “That is why it is so shocking to see the Treasury Department claim there is no public interest in releasing records about how SBF might have influenced or lobbied those regulators to benefit his failing venture. While we plan to appeal this ruling, the Treasury Department is well aware that charging what could be enormous fees to peek behind the curtain of insider influence with financial regulators is akin to preventing public access. Apparently, the public must not only endure the insult of drained accounts with no investigation of wrongdoing in sight, but also must be left simply to trust that financial regulators’ insider relationships with SBF were all above board.”