December 5, 2022

Rumors Emerge Of US SEC Helping Collapsed FTX In Handling Legal Lacunas

FTX’s CEO Meets with SEC’s Chairman

When FTX submitted an application for bankruptcy before Securities & Exchange Commission (SEC), a meeting convened between SEC’s Chairman and FTX’s CEO. However, the convening of the meeting wasn’t confirmed.

Rumors regarding the meeting suggested that Gary Gensler, SEC’s Chairman is helping Sam Bankman-Fried, FTX’s CEO, in handling legal lacunas faced by FTX. According to rumors, help is being offered to FTX for overcoming regulatory concerns.

Meeting between SEC Chief and FTX’s CEO

A few rumors also suggested that FTX might be able to secure a ‘no-action letter’ from SEC through Gensler.

It is however now confirmed that a meeting between Gensler and Bankman-Fried did take place, as could be seen from Gensler’s schedule of meetings.

In the meeting, Gensler was accompanied by several SEC staff members while Bankman-Fried was accompanied by key officials from his firm.

No-Action Relief Too Was Discussed

During the meeting, rumors suggested that both parties discussed two main issues namely ‘no-action relief’ and the risks pertaining to digital assets’ custody.

One of the attendees of the meeting suggested that FTX was lectured by SEC’s Chairman on what is to be done by FTX.

A journalist covering the news regarding the said meeting revealed that during the meeting Gensler did not promise anything to FTX’s CEO. Instead, SEC’s Chairman demanded FTX to ensure full disclosure and compliance.

No Approval Granted by SEC

In this connection, further meetings reportedly were held between FTX and SEC, however, no approval was granted by SEC for no-action relief.

Sours further suggest that Gensler had categorically instructed SEC to apply strict oversight on FTX.

Is Gensler Helping FTX?

Contrary to this, there is a huge debate in which the word is that either Gensler or someone within SEC is supporting FTX.

Some suggested that since Bankman-Fried is a supporter of the Democratic Party and often makes huge donations to the party, hence help from SEC makes sense.

It may be noted that the founder of FTX was the second biggest donor of the political party for the year 2021-22. During this period, Bankman-Fried contributed funds amounting to US$ 40 Million as donations to Democratic Party.

Heavy Criticism against SEC and Its Chairman

Edward Snowden of Tornado Cash openly criticized SEC. He remarked that when a kid commits a crime then arrest warrants are issued by the White House, even though the kid was developing privacy tools for public safety.

He criticized SEC for going easy on real culprits by insisting that FTX has mugged more than 5 million people.

He claimed that special treatment is given to FTX only because the firm was one of the biggest donors of a political party.

To the contrary, Gensler had denied such rumors. In fact, in one of his past week’s interviews, he admitted that the meeting did take place between FTX’s officials and SEC’s officials, which included him also.

However, he denied helping FTX in tackling any legal lacunas that the FTX exchange has been dealing with.