Sam Bankman-Fried Told Crypto Regulators FTX Was Natural Choice

Sam Bankman-Fried was the former CEO of FTX who was charged with fraud and money laundering. He told a top official at a major financial regulator that FTX was destined for the role of “umpires” in the crypto industry, emails show.
“Ryne,” Dan Berkovitz, at the time a Commissioner for the U.S. Commodity Futures Trading Commission (one of many agencies that regulate cryptocurrency), wrote an Oct. 14, 2021 email to Ryne Miller and Bankman-Fried, former President of FTX Brett Harrison, and then-CFTC Commissioner Mark P. Wetjen and Zach Dexter CEO of cryptocurrency company LedgerX.

“I was watching the Dodgers vs. Giants game the other night when I noticed that FTX was the Official Cryptocurrency exchange of Major League Baseball (I assume this is not new). Although I don’t understand why MLB would need a cryptocurrency exchange it is good to see that they have one that supports regulation. Berkovitz continued the email. This email was, along with other emails, obtained by the Watchdog Protect the Public’s Trust under the Freedom of Information Act. It was first shared with the Washington Examiner.

These emails reveal how Bankman-Fried tried to get close to officials in government who had significant influence over the future of FTX as well as the entire cryptocurrency industry. The Justice Department has accused Bankman-Fried of a variety of crimes. He was once valued at $26.5 billion. On Monday, he was taken into custody at his Bahamas home.

Tuesday’s charges by the CFTC against Bankman-Fried and FTX were fraud. The defendants are accused of causing the loss more than $8 billion in FTX customer funds. According to the State Department, he could spend up to 115 years behind bars. He is currently being held in Fox Hill’s maximum security unit. This prison, which is reportedly filled with rats and maggots and has poor sanitation standards, houses him.

Michael Chamberlain, Protect the Public’s trust Director, told the Washington Examiner that the scandals surrounding FTX continue to be “more alarming.”

Chamberlain stated that the man indicted by the DOJ for fraud was trying to expand his reach into the center of government and use his political connections to make the firm the “umpires” of the crypto industry. “All the time, billions of dollars in customer, investor, and employee wealth were disappearing.”

The Securities and Exchange Commission and the CFTC have been arguing about the best way to regulate cryptocurrency. The CFTC published a report in October stating that more than 20% of its 82 enforcement actions for fiscal 2020 were related to cryptocurrency.

Rostin Behnam, Chairman of the CFTC said Tuesday that digital commodity asset markets still pose risks to investors because they lack basic protections. “The CFTC remains fully committed to using all enforcement tools and authorities available to protect investors, and root out those who profit by fraud or misappropriation,” he said.

The CFTC has been criticised for allegedly catering the cryptocurrency industry but taking no action to regulate it. Dennis Kelleher (CEO of Better Markets), a financial nonprofit group, stated in a November memo, that the CFTC is not trying to protect investors but “cheerleading” the industry.

Neither FTX nor the CFTC responded to a request for comments.