Sam Bankman-Fried scored meeting with top regulator, tried to win influence before collapse: Emails

Gabe Kaminsky

March 19, 05:00 AM March 19, 05:00 AM

EXCLUSIVE — Disgraced ex-cryptocurrency kingpin Sam Bankman Fried and his since-bankrupt company FTX scored a meeting with a top regulator and sought to sway them to adopt industry-friendly rules months before the exchange's historic collapse, emails show.

In May 2022, FTX pitched the Federal Deposit Insurance Corporation on why it was apparently poised to be a "superior" cryptocurrency exchange and was swiftly granted a meeting with its chairman, Martin Gruenberg, according to emails obtained by the watchdog Protect the Public's Trust and shared with the Washington Examiner.

FTX WINED AND DINED TOP REGULATOR OFFICIAL AT RITZY DC RESTAURANT, EMAILS SHOW

“It seems that Sam Bankman-Fried and his colleagues at his failed firm FTX were looking to influence crypto regulations to their advantage," Michael Chamberlain, director of the watchdog group, told the Washington Examiner. "Perhaps we should consider ourselves fortunate because, were it not for FTX’s precipitous collapse, the executives now facing federal indictments may have been the primary drivers of government oversight of themselves and their competitors."

FTX was on a lobbying spree to gain influence in Washington before its November 2022 collapse, which was due to it allegedly diverting customer funds to Alameda Research, a defunct-company Bankman-Fried co-founded. Bankman-Fried plead not guilty in January to a slew of criminal charges, including wire fraud and money laundering.

On May 28, 2022, FTX's-then policy head Mark Wetjen, a former commissioner of the Commodity Futures Trading Commission, sent a lengthy email to Gruenberg that touted the exchange's success and requested a meeting. The CFTC regulates derivatives and is tasked with protecting the public from fraud.

"We hope this message finds you well," Wetjen emailed Gruenberg. "I wanted to follow up on my note from Thursday (sorry for the last-minute request!) and see if you might have time the week of June 13 to meet with me and Sam Bankman-Fried, the founder and CEO of FTX, one of the largest crypto exchanges globally."

In the email, Wetjen discussed FTX's "risk model," which pertained to its application pending before the CFTC to amend regulations that would pave the way for more federally authorized cryptocurrency product offerings. The application pertained to bitcoin and ethereum, the two most widely traded coins that maintain the highest market caps.

"Sam and I have worked in traditional market structures, and I strongly believe the FTX model is all things considered a superior model," Wetjen continued in his email. "We are in the unusual position of begging the federal government to regulate us. ... We would be thrilled to explain these points further in person if you are amenable to a meeting. And to the extent the crypto industry comes up in discussions through FSOC [Financial Stability Oversight Council] or otherwise, we wanted you to have this context and our views at FTX about where the federal government should keep its focus as it considers the risks posed by the crypto industry."

Later that evening, Gruenberg replied and accepted Wetjen's request.

"Good to hear from you," Gruenberg wrote. "Hope all is well with you too. Sorry to take so long to respond to your previous email. I'd be glad to meet with you and Mr. Bankman-Fried. If it's OK, I'll ask my assistant, Diane Armstrong, to follow up with you to find a convenient day and time during the week of June 13. Enjoy the rest of the weekend."

Wetjen wrote back roughly one hour later, "Thanks very much Marty."

Julianne Breitbeil, a spokeswoman for the FDIC, confirmed to the Washington Examiner that a "single meeting" took place.

“Chairmen of the FDIC have routine courtesy visits with leaders of financial firms and institutions," she said.

Still, the watchdog that obtained the emails said the swift meeting request being answered by the government shows how FTX evidently exerted major sway among regulators just before the exchange came under legal scrutiny. Senate Democrats notably sent a December 2022 letter to Gruenberg and Federal Reserve Chairman Jerome Powell that raised concerns over why FTX and other firms "may have had closer ties to the banking system than previously understood."

"While the banking system has so far been relatively unscathed by the latest crypto crash, FTX’s collapse shows that crypto may be more integrated into the banking system than regulators are aware," wrote Sens. Elizabeth Warren (D-MA) and Tina Smith (D-MN) in their letter — which asked whether agencies will investigate the relationships between banks and cryptocurrency firms.

The revelation of the meeting between FTX and Gruenberg comes after the Washington Examiner first reported in December 2022 on how Bankman-Fried and his then-FTX colleagues wined and dined Dan Berkovitz, a then-CFTC commissioner, while lobbying for favorable regulations. Shortly after that story was published, Berkovitz announced he was departing from his role as general counsel for the Securities and Exchanges Commission.

Bankman-Fried also told Berkovitz in October 2021 that FTX was the natural choice to be the 'umpires of the crypto industry,'" after Berkovitz described how he noticed at an MLB game that the league had a sponsorship agreement with the exchange, the Washington Examiner reported. The MLB ended that agreement in November 2022.

In August 2022, the FDIC sent a cease and desist letter to FTX that instructed the exchange to stop illegally "misleading" consumers about the status of their funds. The FDIC cited a July 2022 tweet by ex-FTX President Brett Harrison that claimed the FDIC insures cryptocurrency products — which the agency said was "false."

"In fact, FTX U.S. is not FDIC-insured, the FDIC does not insure any brokerage accounts, and FDIC insurance does not cover stocks or cryptocurrency," wrote the FDIC.

White House meetings with Sam Bankman-Fried 'focused on pandemic prevention'

Katherine Doyle

January 03, 05:22 PM January 03, 05:22 PM

FTX founder Sam Bankman-Fried’s meetings with top advisers to President Joe Biden “focused on pandemic prevention-related matters,” according to the White House.

Biden’s press secretary said Bankman-Fried also discussed “general information” on the cryptocurrency industry and crypto exchanges while meeting with counselor to the president Steve Ricchetti and deputy chief of staff Bruce Reed, longtime Biden confidantes, in the months before FTX’s implosion.

CRYPTO ENDS YEAR IN A DEEP, DARK 'WINTER'

White House visitor logs show his most recent visit took place in September, about two months before the exchange collapsed. The Justice Department has charged Bankman-Fried with attempting to defraud investors of $1.8 billion.

White House press secretary Karine Jean-Pierre said the meetings were part of the administration's routine engagement “with officials from a range of sectors and industries, including leaders in business and labor and nonprofits,” and that it “has been clear about the need for Congress to take action when we talk about addressing cryptocurrency.”

Jean-Pierre declined to comment on whether the Democratic Party or aligned groups should consider returning donations Bankman-Fried made.

Bankman-Fried gave lavishly to Democrats during the midterm elections and contributed to Biden’s 2020 campaign. He was tipped as a prominent future political megadonor for the Democratic Party.

He also funded a non-profit aimed at pandemic prevention and operated by his brother, another visitor to the White House, the logs show.

The former crypto billionaire pleaded not guilty to U.S. criminal charges Tuesday.

FTX founder Sam Bankman-Fried will not testify in front of committee after arrest

Misty Severi

December 12, 11:29 PM December 12, 11:29 PM

Former FTX CEO Sam Bankman-Fried will not testify in front of a House committee on Tuesday after he was arrested in the Bahamas on Monday, according to the chairwoman of the House Financial Services Committee.

Chairwoman Rep. Maxine Waters (D-CA) confirmed the news in a statement Monday night, claiming she was surprised to hear of his arrest but that the committee would continue to try and get answers on the collapse of the FTX cryptoexchange through FTX's current CEO John Ray III during the hearing.

FTX FOUNDER SAM BANKMAN-FRIED ARRESTED IN BAHAMAS

“I am surprised to hear that Sam Bankman-Fried was arrested in the Bahamas at the direction of the United States Attorney for the Southern District of New York. It’s about time the process to bring Mr. Bankman-Fried to justice has begun," Waters said in a statement. "Although Mr. Bankman-Fried must be held accountable, the American public deserves to hear directly from Mr. Bankman-Fried about the actions that have harmed over one million people, and wiped out the hard-earned life savings of so many. The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity."

Waters added that Bankman-Fried's lawyers confirmed that the crypto mogul was planning to testify on Tuesday, before his arrest. Testimony from Bankman-Fried was also being sought by the Senate Banking Committee. However, the former CEO refused to testify in front of the Senate committee, senators said Monday.

Bankman-Fried's arrest was first reported by the attorney general of the Bahamas and confirmed by the U.S. attorney from the southern district of New York based on a sealed indictment.

The indictment is expected to be unsealed Tuesday morning, and the crypto mogul is expected to be charged with “wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering,” according to the New York Times.

The collapse and bankruptcy of FTX last month prompted investigations from the Securities and Exchange Commission, the Department of Justice, the Commodity Futures Trading Commission, and the U.S. Attorney's Office for the Southern District of New York, as well as the House Financial Services and Senate Banking committees.

FTX founder Sam Bankman-Fried arrested in Bahamas

Christopher Hutton

December 12, 06:51 PM December 12, 07:16 PM

Officials arrested crypto exchange founder Sam Bankman-Fried in the Bahamas after the United States filed criminal charges against him and requested extradition.

Bankman-Fried's arrest was confirmed by the Attorney General of the Bahamas. The crypto mogul and former billionaire has been the focus of recent regulatory attention in the crypto sphere after his exchange, FTX, collapsed and went bankrupt due to his poor handling of investors' funds.

"The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law," Bahamas prime minister Philip Davis said in a press statement. "While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigation into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere."

EMBATTLED EX-CRYPTO MOGUL SAM BACKMAN-FRIED AGREES TO TESTIFY TO CONGRESS ON FTX COLLAPSE

Bankman-Fried's arrest was confirmed by the U.S. Attorney from the Southern District of New York based on a sealed indictment. The indictment is expected to be unsealed Tuesday morning.

While the FTX founder has made multiple appearances in the media to discuss the business's collapse, he has evaded questioning on whether he is liable for the company's failure and the loss of billions. He also agreed on Friday to testify before Congress and was scheduled to appear before the House Financial Services Committee Tuesday morning by video.

CLICK HERE FOR MORE FROM THE

The collapse and bankruptcy of FTX last month has prompted investigations from the Securities and Exchange Commission, the Department of Justice, the Commodity Futures Trading Commission, and the U.S. Attorney's Office for the Southern District of New York, as well as the House Financial Services and Senate Banking committees.