As Sam Bankman-Fried’s fraud trial heats up, so does the spotlight on Gary Gensler over his allegedly cozy ties with the fallen crypto kingpin.
Last week, the chairman of the Securities and Exchange Commission got a subpoena threat from US Rep. Patrick McHenry, chair of the House Financial Services Committee, who is demanding more information on the FTX collapse.
“You refuse to be transparent with Congress regarding your interactions with FTX and Sam-Bankman Fried,” McHenry told Gensler at a Sept. 27 hearing.
On the other side of the aisle, Rep. Ritchie Torres (D-NY) in December said Gensler was “singularly responsible for the regulatory failures surrounding the collapse of FTX.”
In response, Gensler has remained tight-lipped about his role in the crypto exchange’s downfall.
At the hearing with McHenry last week, the SEC chair “would only say that his staff would continue to work with McHenry’s on the matter” before being repeatedly cut off by the congressman, according to DLNews.
One major issue: Gensler has numerous ties to FTX.
Glenn Ellison – the father of Alameda Research CEO Caroline Ellison, SBF’s ex-girlfriend who has since turned informant to the feds — was the head of MIT’s economics department when Gensler taught a course on blockchain there in 2018.
Elsewhere, several of Gensler’s old cronies worked for FTX and were even responsible for arranging meetings between Gensler and SBF, sources said.
Ryne Miller — who a decade earlier had served as legal counsel to Gary Gensler for two years while Gensler headed the Commodity Futures Trading Commission — joined FTX as its general counsel in August 2021, according to its website.
After Miller joined FTX, Bankman-Fried nabbed his first meeting with Gensler in October 2021, according to a screenshot of Gensler’s calendar.
Miller arranged a conversation between Gensler, Bankman-Fried, and FTX US President Brett Harrison to discuss next steps for the exchange — and how it could be legitimized, according to SEC disclosures.
It wasn’t just Gensler who was wooed by FTX. Then General Counsel of the SEC Dan Berkovitz went to dinner with Bankman-Fried and Miller in October 2021 at an upscale Indian restaurant in Washington, Rasika West End, according to the LA Times.
Berkovitz left the SEC a month after FTX’s November 2022 implosion.
Mark Wetjen, who served as a commissioner of the CFTC at the same time Gensler helmed the agency, joined the dinner as well.
While it’s unclear what was discussed at the meal, Wetjen joined FTX as US Head of Policy and Regulatory Strategy shortly thereafter.
“The FTX case is one of the most significant financial frauds in decades,” Thomas Jones, president of the American Accountability Foundation, told On The Money.
“FTX hired one of Gary Gensler’s closest allies to serve as their ‘lobbyist’ in Washington and then got an unprecedented direct meeting with Gensler to plead their case.”
Wetjen, who has remained close to Gensler, also was responsible for setting up a March 2022 Zoom call just eight months before the exchange’s ultimate downfall, according to reports.
On the call, Bankman-Fried reportedly discussed the possibility of launching a new crypto trading platform with Brad Katsuyama’s IEX.
SEC insiders say it is highly unusual for an SEC Chair to discuss a work-in-progress.
SBF reportedly bragged about having access to Gensler.
The SEC declined to comment.
“FTX and their leadership was the ATM for the uniparty swamp in Washington,” Jones said. “The pay-to-play attitude of SBF and his friends in official Washington, whether they be at the regulatory agencies or in Congress, serves as evidence that Washington has too much power and influence over the American economy and the lives of average Americans.”
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