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.