Gary Gensler Tells FTX That Commitment to Cryptocurrency Won't Work, Or did he?
Securities and Exchange Commission (SEC) Chairman Gary Gensler has previously expressed his distrust of crypto exchanges and said he doesn't see them lasting long. Additionally, he reiterated his stance on the matter during CNBC's Squawk Box on Nov. 10.
"Gary Gensler" met with "Sam Bank man Fried"
Sam Bank man-Fired, the founder of the recently collapsed FTX crypto exchange, met with the SEC Chairman on March 29, 2022, responding to Gensler's famous call to "come in and talk." Additionally, Squawk Box host Andrew Ross Sorkin wasted no time in asking the official a direct question about the reunion.
Gary, you said people should come in. Sam Bank man-Fried came over and met you with IEX's Brad Katsu Yama, someone who draped himself in the flag of an honorable exchange. Do you feel like you've been cheated?
asked the host. However, Gensler did not provide a definitive answer on whether the exchange was non-compliant.
I think we have been clear in these meetings. The same message to the audience, the same message to them that non-compliance will not work. The public will get hurt. And if we had to be the policeman on the spot, go to court, and present the facts and the law before the judges.
Gensler replied, not actually saying anything.
Investors were robbed and swindled “while oversight by the SEC.”
Sorkin also asked Gensler how he would respond to critics who blame the SEC for the lack of regulatory frameworks for the crypto market. Calling it the “beat cop,” the host inquired about the status of the “battle” between the SEC and the CFTC over who is in charge.
I think there is work for both of us market regulators as well as other regulators around anti-money laundering and sanctions. I mean, this area really needs to come into compliance, and in terms of our efforts with the SEC, I couldn't be more proud of the staff.
said Gensler.
However, the president cited “limited resources,” which cannot match the task of “overseeing a $100 trillion capital market.”
Gensler pointed to the "legal loopholes"?
Gensler's non-compliance warning ultimately didn't work for FTX, but the SEC's involvement can hardly get credit (or blame). After the FTX crash, Bank man-Fired apologized, saying he “screwed up and should have done better.” These apologies do not console the lenders, to whom he nevertheless owes 650 million dollars. But Gensler, cop on the beat, has apparently jumped ship.
Meanwhile, Republican Congressman Tom Emmer alleged that Gensler not only knew what Bank man-Fired was doing but was aware of the action. The congressman shamed Democratic rival Gensler for helping Bank man-Fired "find legal loopholes to gain a regulatory monopoly."
Regardless of whether Gensler was "tricked" or knew full well that FTX would leave lenders empty-handed, Emmer offered no evidence for his claim. Thus, it is unclear if the accusation came as a sign of political rivalry or if the congressman has evidence to back up his opinion.
Either way, it doesn't look like investors, whom Gensler claims to be protected above all else, will see their money again anytime soon.
