Crypto Community Calls For Congressional Probe Into SEC Gary Gensler’s Ties To Bankrupt FTX

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As onlookers try to make sense of the mind-boggling meltdown of crypto exchange FTX, crypto community members are demanding the United States Congress look into the relationship between the company and SEC chair Gary Gensler.

Gensler’s Relationship With FTX Looks Like It Was Far From Casual

The Crypto community wants a congressional investigation into SEC chairman Gary Gensler’s ties with FTX and its officials. 

Legal news publication Crypto Law announced in a Tuesday tweet that it had enabled the delivery of more than 9,000 letters to Congress asking for a probe into Gensler’s relationship with the cornered crypto exchange. The petition indicates that there’s evidence former FTX CEO Sam Bankman-Fried, who masterminded the exchange before its downfall last week, met with Gensler.

Gensler indeed met with Bankman-Fried and two other FTX officers in March, according to SEC documents. In the meeting, the group examined the risks associated with the custody of digital asset securities. 

Most importantly, the memos of the meeting highlight “conditional no-action relief”. The conditional no-action relief is a “mechanism that allows registrants to obtain certain assurances when their conduct may touch upon a gray area of regulation, or even may be technically proscribed, but does not raise the policy concerns underlying a particular rule.” Still, there’s no proof that FTX was given this consideration.

Some crypto pundits have observed that the relationship between FTX and Gensler goes beyond the meetings they had. Notably, FTX US’s general counsel previously served as Gensler’s lead counsel while he was at the Commodity Futures Trading Commission (CFTC).

It is worth noting, the ties between FTX and the SEC go beyond in-person meetings.

The general counsel of FTX US had served as lead counsel to Chairman Gensler at the CFTC.

By all accounts, he is a standup and excellent attorney.

The point is that the SEC was pretty close.

— Dane Lund (@lund_dane) November 11, 2022

To make matters more ominous, Gensler’s boss at Massachusetts Institute of Technology (MIT) was Alameda Research CEO Caroline Ellison’s father. SBF, who co-founded the FTX-affiliated trading platform, also went to MIT.

Moreover, others like Delphi Digital General Counsel Gabriel Shapiro, suggest that Bankman-Fried spent millions worth of dollars in “political bribes” to push the Digital Commodities Consumer Protection Act 2022 (DCCPA) that, if enacted, would effectively kill decentralized finance. Interestingly, U.S. senators Debbie Stabenow and John Boozman recently affirmed their commitment to publishing a final version of the bill despite the FTX debacle.

Meanwhile, the Australian Securities and Investments Commission (ASIC) has suspended the Australian Financial Services (AFS) license of FTX Australia until May 15, 2023, following the appointment of a voluntary administrator to help about 30,000 citizens and over 130 local firms recover their funds from the bankrupt exchange.

FTX Australia’s suspension is the latest domino to fall in the spectacular implosion of Bankman-Fried’s once-renowned empire.

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