Gary Gensler Ftx: The collapse of FTX has become the financial scandal of the decade, and U.S. lawmakers are eager to know who’s at fault. On Tuesday, the Senate Banking Committee interrogated members of the Federal Reserve and other financial agencies about how FTX could have siphoned off billions in customer and investor funds without anyone noticing. While there was some finger-pointing and calls for new laws regulating crypto, lawmakers are likely to get really fired up when SEC Chair Gary Gensler–the country’s top financial cop–is questioned about FTX’s misbegotten empire.
One Washington insider familiar with the crypto scene told me that Gensler will likely face intense congressional questioning about why his agency missed such a significant fraud that took place right under its nose. Some lawmakers are likely to question the SEC chair why, just a month before FTX collapsed, he had chosen to engage in an overly public enforcement action against Kim Kardashian over a minor token sale from 2021. After Republicans take control of the House in January, concerns will only increase. Rep. Tom Emmer (R-Minn.), a member of GOP leadership, has already indicated his readiness to investigate Gensler regarding an alleged plan to secure a regulatory monopoly for FTX after meeting with CEO Sam Bankman-Fried in March.
Gensler may face tough political odds, but that doesn’t guarantee him his job. A source within the Democratic party tells me Gensler’s strategy will be to project himself as a hero for keeping FTX and other major crypto exchanges offshore–an act which influential progressives who dislike crypto will celebrate him for. Additionally, Gensler may attempt to shift blame away from the SEC onto its smaller sister agency, the CFTC–whose mandate it oversees derivatives (FTX was one), an ironic tactic considering Gensler has claimed broad crypto jurisdiction for himself instead.
Meanwhile, a Washington insider warned me the GOP could risk playing into conspiracy theories about Gensler’s connections to top Democrats. He had some valid points. After I alluded to some of those connections in last week’s post, my Twitter feed lit up with right-wing extremists declaring Gensler’s activities were part of an extensive plot involving George Soros, Bill Clinton, pedos, etc. If any one of the House Republicans starts making such claims publicly, it will only further solidify Gensler’s support among Democrats and the White House.
All of this points to a growing concern among serious crypto policy experts: The debate over how to regulate cryptocurrency is increasingly divided along partisan lines, an unfortunate development for anyone interested in crypto and American innovation. Blockchain is fundamentally an apolitical technology and needs the appropriate legal framework in order to flourish. Let us hope that during Gensler’s coming questioning, this important point won’t get lost.
Caroline Ellison’s Tumblr blogs reveal she had an interest in polyamory, Chinese harems, and the Indian caste system at 28 years old. (Decrypt)
Sam Bankman-Fried recently leaked documents to investors, revealing FTX’s revenues had grown 6,600% in two years (fortune).
Ten major banks, in partnership with the New York Fed, are launching a blockchain-based digital money system known as “regulated liability network” or RLN (PYMNTS).
FTX’s corporate coach says he was “shocked” by SBF’s extensive financial fraud, adding that staff members appeared to have been “undersexed, if anything.” (NYT)
Tuvalu, a small Pacific island nation whose existence is threatened by rising sea levels, plans to create a metaverse version of itself in order to preserve its geography and culture (Reuters).