SEC Commissioner Gary Gensler met with Sam Bankman-Fried, the head of FTX eight months before its collapse and the company was forced into bankruptcy.
D.A. Davidson director of research Gil Lauria and Duke Financial Economics Center policy director Lee Reiners debate the case for cryptocurrency as the FTX crisis continues to unfold on 'The Claman Countdown.'
While exchanges such as Coinbase, Binance, and Bankman-Fried’s FTX process crypto trades for customers, they operate in a regulatory gray area without explicit SEC approval, thus opening management to possible sanctions. Katsuyama and his team, along with Bankman-Fried with his top people, provided Gensler and senior SEC officials with the broad outlines of their idea and questioned whether existing SEC rules — formulated through so-called no-action letters that set industry standards — would apply to their new venture, according to people with direct knowledge of the matter.
Officials from FTX and IEX together held one more meeting with the SEC on the concept as it began to take shape in the months to follow. Executives from IEX met with SEC officials separately nearly up until the time of the FTX bankruptcy last week, these people say. Bankman-Fried, 30, was once worth north of $20 billion, but his fortune has largely evaporated amid the FTX collapse as he faces mounting legal woes. The ties between FTX and Alameda are the focus of numerous criminal and regulatory investigations following FTX's bankruptcy and reports that Bankman-Fried may have used FTX customer accounts to privately fund risky investments made by Alameda.
Gensler was appointed SEC chair two years ago and has ruffled feathers by pushing the SEC's authority into nontraditional areas such as corporate climate change disclosure. The FTX debacle also coincides with Gensler's aggressive crackdown on alleged crypto abuse despite questions as to whether the SEC has the authority to regulate digital coins.
"Reports to my office alleged he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We're looking into this," Emmer wrote. Fox Business has learned that if the GOP wins control of the House, they plan hearings into the Gensler-FTX deliberations.
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