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

Disgraced former cryptocurrency executive, Sam Bankman-Fried, and his bankrupt company FTX, had a meeting with a top regulator in May 2022 to try and sway them to adopt industry-friendly rules months before the exchange’s historic collapse, according to emails obtained by watchdog group, Protect the Public’s Trust, and shared with the Washington Examiner.

FTX was apparently lobbying to gain influence in Washington prior to its November 2022 collapse, which was allegedly due to the company diverting customer funds to Alameda Research, a defunct firm co-founded by Bankman-Fried. Bankman-Fried has pleaded not guilty to a series of criminal charges, including wire fraud and money laundering.

The emails show that FTX pitched the Federal Deposit Insurance Corporation (FDIC) in May 2022, outlining why it was superior to other cryptocurrency exchanges and it was swiftly granted a meeting with its chairman, Martin Gruenberg. FTX’s policy head, Mark Wetjen, requested the meeting to discuss FTX’s new risk model and Federal-level crypto product offerings. Gruenberg promptly accepted the meeting, which took place in June 2022.

Michael Chamberlain, the director of Protect the Public’s Trust, commented on the emails, “It seems that Sam Bankman-Fried and his colleagues at his failed firm FTX were looking to influence crypto regulations to their advantage. 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.”

The emails reveal that FTX’s executives were in contact with regulators and were apparently attempting to gain favour with them, despite having diverted customer funds from FTX to Alameda Research. While the FDIC confirmed that a “single meeting” took place between FTX and Gruenberg, Senate Democrats raised concerns over why FTX and other firms like it “may have had closer ties to the banking system than previously understood.”

The disclosure of the meeting between FTX and Gruenberg follows the recent report in the Washington Examiner that Bankman-Fried and colleagues had wined and dined Dan Berkovitz, a former commissioner of the Commodity Futures Trading Commission, while lobbying for favourable regulations.

In August 2022, the FDIC sent a cease and desist letter to FTX, instructing 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. The agency clarified that FTX was not FDIC-insured, and FDIC insurance does not cover stocks or cryptocurrencies.