Sam Bankman-Fried Conspired With SEC for “Special Treatment:” US Congressman

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Tom Emmer – the U.S. con­gres­sion­al rep­re­sen­ta­tive for Min­neso­ta – recent­ly spoke on the polit­i­cal meet­ings and fail­ures sur­round­ing Sam Bankman-Fried (SBF), pri­or to his exchange’s collapse. 

The Repub­li­can sug­gest­ed that Bankman-Fried tried cur­ry­ing “spe­cial treat­ment” from the Secu­ri­ties and Exchange Com­mis­sion (SEC) through meet­ings with the agency, and attempt­ed to push leg­is­la­tion to the same effect. 

Bankman-Fried’s Political Relationships

In an inter­view with FOX on Tues­day, Emmer said FTX’s blowup was not a fail­ure of cryp­to, but of “cen­tral­ized finance,” “busi­ness ethics,” and gov­ern­ment over­sight pro­ce­dures. The con­gress­man said he had “major ques­tions” about the SEC’s fail­ure to pre­vent the disaster. 

“They were work­ing, appar­ent­ly, with Sam Bankman-Fried and oth­ers, to give them spe­cial treat­ment from the SEC that oth­ers aren’t get­ting,” said Emmer. He men­tioned meet­ings the agency held in March with SBF, oth­er FTX exec­u­tives, and a U.S.-based trad­ing firm that FTX part­nered with in April. 

“Sam Bankman-Fried was push­ing spe­cial-treat­ment leg­is­la­tion through con­gress. when it was final­ly revealed what it was, and the indus­try start­ed rais­ing red flags all over the place, that’s when this thing came apart,” he added. 

Emmer blast­ed Gensler for fail­ing to pro­tect investors from such cat­a­stro­phes, includ­ing the fall­outs of Cel­sius, Voy­ager, and Ter­ra ear­li­er this year. “What is the reg­u­la­tor doing going after good actors in the com­mu­ni­ty, and work­ing back­room deals, it appears, with peo­ple who are doing nefar­i­ous things?”

The con­gress­man, who is also the House Major­i­ty Whip, first allud­ed to inves­ti­gat­ing ties between the SEC and FTX ear­li­er this month. On Novem­ber 10th, he claimed to have received reports alleg­ing that the agency was work­ing to secure a “reg­u­la­to­ry monop­oly” for FTX using “legal loopholes.”

The SEC has fre­quent­ly been crit­i­cized for fail­ing to pro­vide reg­u­la­to­ry clar­i­ty that would help the cryp­to indus­try best devel­op in the Unit­ed States. Coin­base CEO Bri­an Arm­strong argued that the regulator’s inac­tion has pushed trad­ing activ­i­ty to unreg­u­lat­ed areas over­seas, con­tribut­ing to investor harm. 

CME Chief’s Early FTX Callout

Aside from the SEC, CME Group CEO Ter­ry Duffy also met Bankman-Fried in March. 

The exec­u­tive not­ed sim­i­lar “red flags” about both his char­ac­ter and oper­a­tions in a con­ver­sa­tion with CNBC last week. He said SBF turned down Duffy’s offer of his cryp­to fran­chis­es worth $30 mil­lion, as he would have required Bakn­man-Fried to fol­low his risk-man­age­ment framework. 

“You’re a fraud. You’re an absolute fraud,” he claimed to have told Bankman-Fried at the time. 

In anoth­er inter­view with CNBC on Tues­day, he too said he was always sus­pi­cious of SBF’s close­ness with reg­u­la­tors and politi­cians, who were “singing hymns” about him dur­ing his vis­its to Washington. 

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