Conflicting Reports Emerge About SEC Helping Bankrupt Crypto Exchange FTX With Legal Loopholes

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The US Securities and Exchange Commission (SEC) reportedly met several times with crypto exchange FTX and former CEO Sam Bankman-Fried before the crypto firm filed for bankruptcy. SEC Chairman Gary Gensler was rumored to be helping FTX with legal loopholes. However, a new report points to a conflicting view.

Gensler meeting with Sam Banksman-Fried and FTX

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Following the bankruptcy filing of cryptocurrency exchange FTX, rumors have surfaced that US Securities and Exchange Commission (SEC) Chairman Gary Gensler has called on FTX’s former CEO Sam Bankman-Fried and his bankrupt exchange to “get a regulatory monopoly.” flaws”. Some have even speculated that the SEC boss was the one to issue FTX non-action letter,

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Gensler’s own calendar shows that he met Bankman-Fried in March. According to an SEC meeting note, “Chair Gensler’s staff members met with IEX and FTX employees discuss Custody of digital asset securities by special purpose broker-dealers, including the unique risks associated with the custody of digital asset securities and the conditional no-action reliefs discussed in the statement.

However, Fox Business’ Charles Gasparino Explained On Twitter on Saturday that “contrary to speculation” Gensler about Gensler wanting to grant former FTX CEO Sam Bankman-Fried a regulatory monopoly on the crypto exchange:

The March meeting between the two sides was described by a man attending a ’45-minute lecture by Gensler’ on what he wants from a crypto exchange.

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The journalist said that the SEC chairman not only made no promises to Bankman-Fried, FTX and IEX, but he “ordered them to provide more in the form of disclosures etc. to the SEC about their models.”

“The follow-up meetings with the SEC continued almost until the burst of FTX, but no SEC approval was indicated,” he continued. “The House GOP calling Gensler as a witness may make Bankman-Fried’s dame political leanings think twice about hearing FTX on FTX. Sources say Gensler told Brad Katsuyama and Bankman-Fried That he wanted strict oversight, standards and no guarantee of approval.

Nonetheless, many expressed their belief on social media that Gensler or other SEC staff members were helping FTX. Some suspected that this was because Bankman-Fried is a big donor to the Democratic Party. The former FTX chief was the second largest donor to the Democrats in 2021-22, donating $39.8 million – second only to George Soros, according to Open Secrets political donor data.

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

The White House banned and arrested children for the ‘crime’ of making privacy tools to protect you, while ‘regulators’ were quietly hanging out with thieves who just robbed 5 million people. gap? The thieves were big political donors.

Congressman Tom Emmer (R-MN) tweeted Thursday: “Reports to my office allege he was helping SBF and FTX work on legal loopholes to gain regulatory monopolies. We’re on it. Paying attention.”

Last week, Gensler confirmed during an interview on CNBC that he had met with Bankman-Fried. The SEC chairman said: “I think we are clear in these meetings … non-compliance will not work, the public will suffer.”

The SEC chairman has often been criticized for his enforcement-focused approach to regulating the crypto industry. Gensler has repeatedly stated that crypto trading and lending platforms must “come in”, talk to the SEC and be registered. However, Ripple CEO Brad Garlinghouse said in September last year that instead of working with the crypto industry, “the SEC is using its meetings with companies as key generation for its enforcement actions.” His company is currently engaged in an ongoing lawsuit with the SEC over the sale. XRP,

In addition, several news outlets have reported that the 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 Chair Gensler were working with crypto exchanges FTX and Sam Bankman-Fried on legal loopholes? Let us know in the comments section below.

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