FTX’s collapse shows that Regulators are not working to protect interests of crypto investors

FTX worked closely with Regulatory Authorities yet it engaged in mismanagement of Customer funds??

FTX Exchange collapse brings forth so many questions, because it’s not a CEX that’s actually unregulated. SBF, Sam Bankman Fried actually appointed former Commodity Futures Trading Commission (CFTC) commissioners into FTX that have experience in this aspect of regulation, compliance etc.

Infact, he appointed a figure who has experience working with the current Securities and Exchange Commission (SEC) Chair, Gary Gensler himself.

There’s more to be mentioned here which I will dwell on later but the point is how can an Exchange that has professionals having extensive experience and know how in regulatory compliance and Policy aspects be that Exchange that has mismanaged Customer Deposits quite illegally. This was certainly not expected from FTX. .

FTX’s Regulatory Compliance efforts was an illusion that fooled the crypto community

Image Source SEC is the top Financial Regulatory Authority in the US

Everyone thought that FTX specially hired those names having first hand knowledge and experience working on Regulatory Policy and compliance aspects because FTX was aspiring to maintain recognized standards implementing sound practices recognized by US financial regulators to be essential in safeguarding interests of investors.

However, it is evident that despite employing services of experienced personnel in the domain of regulatory compliance, FTX implemented those faulty practices that regulatory authorities would consider illegal.

Hmmm…

Special Hires into FTX to oversee the Exchange’s Regulatory Compliance aspect

Image Source FTX's SBF had hired experts in Financial Regulatory Policy matters who were former CFTC Commissioners to oversee FTX's Regulatory Compliance aspects

Before going further, let me enlighten readers about those names who were hired in FTX to oversee that FTX functions in a regulatory compliant fashion.

Ryne Miller

Ryne Miller was hired in August 2021 as General Counsel for FTX.US.

Ryne is a former CFTC attorney. He served as a CFTC attorney for 2 years and then became Legal Counsel to the CFTC chair in 2013. Guys, do you know who was the CFTC chair to whom Ryne served as Legal Counsel. It was the current SEC Chair, Gary Gensler.

So, here SBF hired a person who has experience working with Gary Gensler.

This is something indeed!!

**Mark Wetjen **

Mark Wetjen is a former CFTC Commissioner hired in November 2021 as the Head of Policy and Regulatory Strategy in FTX.

Wetjen served for 5 months as Acting Chair of CFTC after Gary Gensler. His role in FTX was to engage with regulatory and legislative bodies like the SEC and CFTC.

Wonder what this Wetjen did in FTX now??? … Again a reputed name having worked leading the Regulatory institution CFTC itself !!

Hmmm…

Jill Sommers

JiIl Sommers, was also a former CFTC Commissioner, who became a board member of the FTX US Derivatives in September 2022.

Sommers had stated that focus would be on making FTX US Derivatives a premium regulated crypto derivatives trading platform and for this collaboration will be done with major financial regulators.

One would assume one can believe Sommers word as Sommers worked heading leadership roles in Policy and Regulatory affairs arena for big institutions.

Yes, Jill Sommers worked in the capacity of the Policy Director and Head of Government Affairs for the International Swaps and Derivatives Association (ISDA) and as the Managing Director of Regulatory Affairs for the Chicago Mercantile Exchange.

It’s unbelievable that Regulators were not aware of FTX’s Malpractices

So, FTX swindled their customers’ deposits and these big names who were supposedly working closely with SEC and CFTC to ensure that the exchange functions in a regulatory compliant spirit, did not know about all the malpractices FTX was committing?

Nahh…that’s unbelievable… All these big guys were recruited in FTX just so that the crypto community gets an illusion that FTX is a regulatory compliant, and trusted CEX to use.

Also, it’s now suspected that SBF was having influence with the top guys in the regulatory arena and politicians so they don’t catch him and he can do all the malpractices without hindrance.

Corruption indeed!!! These guys must have been bribed for making the false pretenses that they are ensuring FTX’s regulatory compliance. Hmmm…

It’s impossible that the Regulatory institutions would not have gotten wind of FTX’s malpractices as well known names having connections to CFTC and SEC were working in the Exchange…

Hmmm…

Well… there are suspicions that SBF has connections with SEC Chair, Gary Gansler himself as he recruited Caroline Ellison as Alameda Research’s CEO, whose father Glenn Ellison is a friend of Gary Gensler as he was his colleague at MIT!!

Image Source

FTX had won powerful politicians as friends thanks to SBF’s liberal donations

If all this is not enough SBF did more to be favoured by powerful politicians though his generous donations!!

SBF was the second biggest donor to Joe Biden’s Presidential campaign having contributed 5.2$ million. This now criminal ex FTX CEO is known to have donated quite liberally to left leaning campaigns.

Already, SBF has connections with politicians with his mom, Barbara Fried leading a left-leaning lobby group, Mind the Gap that collects donations for the Democrat party.

Now, with SBF and his Mom covering the left contributing to Democratic Party, the right, Republican side was taken care of with Ryon Salame, Co-CEO of FTX Digital Assets making heavy donations amounting to 36$ million to right-wing candidates!!

Hmmm…

Definitely, SBF established connections with powerful figures and this way perhaps all the gross mismanagement practices committed by FTX was ignored by regulators.

Regulators seem interested in regulating crypto to weaken the crypto ecosystem and control it

So, I mentioned the need for regulation of the crypto industry to protect investors, but it appears Gary Gensler and the SEC is not interested in regulating crypto for this purpose.

Here is where the problem lies, it looks like SEC wants to regulate crypto to have power over it, control over Blockchain applications so things like DEFI don’t undermine the power of the financial institutions.

Everyone knows these powers despise crypto also because they are afraid crypto might replace Government controlled fiat currency which they obviously don't want as it will take away power of Government over its people.

Hmmm…

But FTX’s collapse only makes users now wary of using CEXs, when a CEX like FTX that had worked closely with regulators frauded users, what’s to say these regulators would do anything to protect the interests of crypto investors. They just want crypto to get a bad name out of all this.

Yet, users have now been flocking to self custodial wallets and DEXs to trade crypto now.

Does this not make a strong case for DEFI and crypto now?

Hmmm…food for thought .

Thanks for reading.