Congressman: SEC Was ‘Asleep at the Wheel’ Regarding FTX

The US Securities and Exchange Commission was “asleep at the wheel” in how it enforced financial and corporate control requirements on FTX Group and its subsidiaries, US Rep. Pete Sessions R-TX, said.

“We need to look at what the Securities and Exchange Commission was doing,” Sessions said, adding that “the SEC was asleep at the wheel for these billions of dollars that we now find out about a year later.”

The SEC filed charges against Sam Bankman-Fried (SBF), the former CEO of FTX, on Dec. 13, claiming that Bankman-Fried violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In the complaint, the SEC requests an injunction to prohibit Bankman-Fried from participating in the issuance, purchase, offer or sale of any securities except for his own account.

SEC Chair Gary Gensler said Bankman-Fried “built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.” The charges came a day after his arrest by Bahamian authorities at the request of the United States.

Representative Sessions also noted that a year ago, Bankman-Fried testified at a congressional committee hearing, where he was asked about the need for regulatory oversight of cryptocurrencies. Bankman-Fried replied, “it’s just a matter of transparency,” according to Sessions.

The Congressman also noted that Bankman-Fried had “full access to members of Congress and the U.S. Senate.”

Session’s comments follow those of Senator Tom Emmer, who criticized Gensler for his flawed “crypto information-gathering efforts,” calling on him to appear before Congress to explain “regulatory failures.”

It seems like it’s more than just asleep at the wheel. FTX itself has a curious and uncomfortably close relationship with SEC Chair Gensler, the very man most in the industry see as an authoritarian opponent of crypto. Gensler’s questionable relations to FTX range into inappropriate professional and familial relations with key FTX players such as Alameda CEO Caroline Ellison. And this was apparent even as Gensler was shepherding FTX through the SEC’s minefields and providing a golden road.

Top down regulatory reform is needed.