​Congressman accuses SEC chair of facilitating FTX for regulatory privileges

What’s new? Republican Congressman Tom Emmer, who represents Minnesota, alleges that Securities and Exchange Commission (SEC) Chairman Gary Gensler used loopholes in the law to help FTX crypto exchange CEO Sam Bankman-Fried get regulatory privileges. In a November 10 tweet, the politician criticized Gensler for “runs to the media” amid FTX’s liquidity problems that caused turmoil in the cryptocurrency market.

Interesting. @GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We're looking into this. https://t.co/SznowgcP6V — Tom Emmer (@RepTomEmmer) November 10, 2022

What happened before? Shortly before Emmer’s statement, the SEC chair appeared on CNBC’s Squawk Box, where he confirmed Bankman-Fried’s meeting with his agency. Gensler said that in that, and other similar conversations, crypto industry leaders were made clear that “non-compliance is not gonna work.” In this, the official did not confirm Bloomberg’s information that the regulator was investigating FTX’s US arm.

"When you mix together a bunch of customer money and borrowing against it, investors get hurt," says @GaryGensler. "This is a very interconnected world in #crypto with a few concentrated players. When markets turned on them it appears that a lot of customers lost money." pic.twitter.com/o1XmXdyt5u — Squawk Box (@SquawkCNBC) November 10, 2022

Emmer noted that information about Gensler and Bankman-Fried’s cooperation had been provided to him in reports, but had not yet presented any evidence. The congressman added that his team would look into the information.

On November 10, the SEC chair cited FTX’s crash as a pattern and part of a broader trend that has been occurring in the crypto market over the past six months.

Previously, Gensler has repeatedly stressed the need for stricter crypto regulation. In July, he called for accelerating the registration of exchanges with the SEC, and later the agency began investigating all trading platforms in the United States. In October, Gensler said that regulation of digital assets should build on the already existing regulatory framework.

Before he was appointed chairman of the SEC, Gensler was an employee of the Maryland Democratic Party and was involved in the presidential campaigns of Hillary Clinton and Barack Obama in various years. In 2022, Bankman-Fried became the second-largest donor to the Democratic Party after George Soros.