Emails reveal Sam Bankman-Fried’s courtship for federal agencies

Prior to his arrest in mid-December, cryptocurrency billionaire Sam Bankman-Fried repeatedly claimed that he is a responsible business leader who wants more regulation of cryptocurrency and for his industry to become part of the mainstream financial system.

But now, with the Commodity Futures Trading Commission, the Securities and Exchange Commission and the Justice Department prosecuting the 30-year-old for fraud, the extensive professional relationships he’s had with current and former federal regulators risks embarrassment for all involved.

As CEO of FTX, a crypto exchange, Bankman-Fried hired several former federal regulators to help him connect with top officials CFTC, the agency he hoped would be tasked with regulating his industry, emails show.

Many of Bankman-Fried’s top deputies were ex-regulators. FTX General Counsel Ryne Miller was previously legal counsel to Gary Gensler, then Chairman of the CFTC, who is now Chairman of the SEC.

Mark Wetjen, former head of FTX policy and regulatory strategy and current director at LedgerX, a subsidiary of FTX, was a former acting chairman and commissioner at the CFTC nominated for the position of President Obama.

Jill Sommers, another former CFTC commissioner, was also a member of the FTX board.

Miller helped arrange Bankman-Fried to meet and have dinner with former CFTC Commissioner Dan Berkovitz currently General Counsel for the SECEmails received by The Times in response to a Freedom of Information Act request.

Miller hosted the October 2021 dinner for Berkovitz and Bankman-Fried at Rasika West End, an upscale Indian restaurant in Washington, D.C. Zach Dexter, CEO of FTX-affiliated Ledger X, Wetjen, and Michelle Bond, CEO of the Assn. for Digital Assets Markets, were also invited to the dinner, but the records do not indicate whether they attended.

“I think the last time I went there with you was at your CFTC farewell dinner with Gary in 2013,” Miller wrote to Berkovitz. Emails show Berkovitz Miller paid back his $50 share of the dinner.

Miller also invited CFTC Commissioner Dawn Stump to dinner with Bankman-Fried or to visit the FTX offices in Chicago on November 11th. 3, 2021. It is uncertain whether Stump accepted the invitation; She could not be reached for comment. Stump left her position at the CFTC in April to work for Solidus Labs, a cryptocurrency company.

“I won’t comment on that. I understand the questions but am not commenting on requests at this time,” Miller told The Times when asked about the emails.

The SEC declined to comment on Berkovitz’s role in the current case against Bankman-Fried and other FTX and FTX-affiliated officials. The same day, The Times asked questions about his role, Berkovitz announced his resignation by the SEC, effective 31/1/2023.

Months before dinner with Berkovitz, Wetjen requested an urgent meeting with current CFTC chairman Rostin Behnam and David Gillers, Behnam’s chief of staff, to discuss LedgerX.

“I am seeking some time to discuss a LedgerX matter of significant urgency with you,” Wetjen wrote to Behnam on Aug. 1. 26, 2021. “Could you please accommodate a request for a brief discussion on this? Thanks for the consideration.”

Wetjen, Dexter — CEO of LedgerX — and others were able to set up a meeting with Behnam just hours later.

Wetjen could not be reached for comment.

“These few emails show that the CFTC had an open door policy of meeting basically whenever FTX wanted to meet, including [with] the incumbent chairman at the time,” Dennis Kelleher, president of Better Markets, a nonprofit that advocates for financial regulation, told The Times. “FTX hired former CFTC officials, apparently for the purpose of accessing and influencing the CFTC where FTX had a radical proposal to dramatically change the structure and operation of clearinghouses.”

On Dec. 1, Behnam told the Senate Agriculture Committee that he had multiple meetings with Bankman-Fried to discuss the CFTC’s review of FTX’s clearinghouse application. Bankman-Fried took a “hard-headed approach,” Behnam said.

“In the last 14 months, we have met at the CFTC office 10 times, at your request, all in relation to … this clearinghouse application,” Behnam added. “There were very, very strong feelings about this application. And I felt that as chairman of the agency, I dealt directly with FTX and Mr. Bankman-Fried.”

The clearinghouse application was never approved, said Steven Adamske, a spokesman for Behman.

Bankman-Fried was scheduled to testify before the House Financial Services Committee on Dec. 13 but was arrested in the Bahamas the night before. In his prepared written testimonyBankman-Fried planned to say he was pressured into signing Chapter 11 bankruptcy documents releasing his control of the now-bankrupt company.

“Most of that pressure came from Ryne Miller,” Bankman-Fried wrote in the prepared testimony, adding that he was also pressured by attorneys from Sullivan & Cromwell, the law firm overseeing the bankruptcy proceedings. “They also called many of my friends, colleagues and family members … some of whom were emotionally damaged by the pressure. Some of them came to me crying.”

Bankman-Fried was extradited to the United States to stand trial in the Southern District of New York. On Thursday, he was released into the custody of his parents on $250 million bail.

“We believe this is the largest pretrial bail to date,” Assistant US Attorney Nicolas Roos said said. Bankman-Fried will have a travel permit from his childhood home in Palo Alto to the US District Court for the Northern District of California.

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