Emails Show Former Regulators Helped SBF Get Into CFTC

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Sam Bankman-Fried left a bail hearing on December 22 on federal fraud charges for his role leading the failed crypto exchange FTX. The SEC and CFTC have both filed new lawsuits against the crypto founder, although there are close ties between the two agencies and former FTX executives. Photo: David Dee Delgado (Getty Images)

As two of America’s top financial regulators along with the Department of Justice collectively decided to hammer the founder of failed crypto exchange FTX with allegations of massive fraud, there has been a timeless ago. a year that same founder was the talk of the town in Washington. Once-crypto billionaire Sam Bankman-Fried had chatted with lawmakers and regulators, and new emails show how the 30-year-old former FTX CEO used former regulators to get closer to US agencies.

The Los Angeles Times reported on Monday that emails showed Ryne Miller, FTX’s general counsel, successfully used past contacts with former regulators to secure a seat at the table for Bankman-Fried with the commissioner. of the Commodity Futures Trading Commission, Dan Berkovitz. The October 2021 meal took place at an upscale restaurant in Washington D.C. This is according to emails the LA Times received via a Freedom of Information Act request.

You see, Miller had worked as legal counsel for Gary Gensler, who was chairman of the CFTC and is now chairman of the Securities and Exchange Commission, from 2012 to 2013. Miller then worked as an attorney for the law firm Sullivan & based At New York. Cromwell before coming to FTX in 2021. Miller reportedly paid Berkovitz $50 for his share of the dinner.

Also at the dinner was Mark Wetjen, a former CFTC chairman and commissioner who, at the time, worked as chief policy officer for FTX. Zach Dexter, the CEO of LedgerX was also promised a seat at the table. LedgerX is an affiliate of FTX that has been cited as one of the few solvent parts of the former Bankman-Frieds crypto empire. Although after FTX and many of its affiliates declared bankruptcy, LedgerX has since been put up for sale.

The emails also show that Miller tried to get CFTC Commissioner Dawn Stump to come to the dinner, but reports could not confirm whether she actually attended. You won’t find her at the CFTC anymore, as she now works as an advisor for crypto risk monitoring firm Solidus Labs.

Gizmodo entered the revolving door between US financial regulators and crypto companies, a door that was spinning so fast it was enough to make your head spin. You have former officials from the US Treasury Department, CFTC, SEC, and others like Binance, Coinbase, Astra Protocol, and other crypto-minded financiers like venture capital firm a16z.

Despite this alleged camaraderie between crypto players and people supposed to regulate the industry, the SEC and CFTC have filed civil complaints against Sam Bankman-Fried. The two agencies alleged that the founder of FTX committed fraud by authorizing an unlimited line of credit between the crypto exchange and its sister hedge fund firm Alameda Research. Although the crypto founder, who often uses his initials SBF, claimed that Alameda operates as a separate entity, regulators have alleged that he still nominally controls FTX and Alameda, and funneled crypto users into the fund. speculative.

Gizmodo contacted the CFTC for comment, but we did not immediately receive a response. Berkovitz, the guy who helped organize dinner with SBF and crypto regulators, is now general counsel for the SEC. We also reached out to the SEC to see if they had any comment on Berkovitz’s role with the current SEC complaints against Bankman-Fried, but the SEC declined to comment.

During a recent hearing with the US Senate Agriculture Committee, current CFTC Chairman Rostin Behnam attempted to explain why his agency is best suited to regulate the entire industry. of declining crypto, while fighting allegations that his agency mocked SBF FTX. He said his agency had met with FTX agents 10 times, although he further claimed that all of those meetings were about setting up a crypto clearinghouse. He further hailed LedgerX as so strong because it was regulated by the CFTC.

Some US government officials have been too eager to share a bed with the fledgling crypto industry, to the point now that when that same industry finally shows its uglier side, those regulators who were supposed to protect users and investors from crypto’s worst quirks the brothers are now forced to pretend they’ve always been tough on crypto while flexing their rather thin muscles. Although that doesn’t do much for investors who have collectively lost billions of dollars this year alone from egregious crypto exchanges.

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