Lawmakers: SEC Failure with FTX Lies with Gensler

Congressmembers turned up the heat on the US Securities and Exchange Commission this week, joining a chorus of industry voices that say the regulator plays favorites and practices a capricious “regulation by enforcement” agenda.

Now two high-ranking lawmakers say they want the SEC to share details around its communications with disgraced FTX founder Sam Bankman.

Reps. Patrick McHenry, R-N.C., and Bill Huizenga, R-Mich., called into question the SEC’s cooperation with the US Department of Justice in a Friday letter to SEC Chair Gary Gensler. 

McHenry is chair of the House Financial Services Committee, while Huizenga leads a House subcommittee that focuses on government oversight and related investigations. 

The congressmen gave the regulatory agency a Feb. 24 deadline to share all communications between employees of the SEC’s division of enforcement — as well as Gensler’s staffers — related to charges filed against Bankman-Fried. 

McHenry and Huizenga are also requesting related records of correspondence between the SEC and DOJ.

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“Presumably, the SEC’s Division of Enforcement did a complete investigation into the actions by Sam Bankman-Fried and presented the findings to the Commission for its review and to authorize the charges,” McHenry and Huizenga wrote in a Friday letter to Gensler. “Yet, the timing of the charges and his arrest raise serious questions about the SEC’s process and cooperation with the Department of Justice. The American people deserve transparency from you and your agency.”

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The letter comes after Rep. Ritchie Torres, D-N.Y., in December called for the Government Accountability Office to look into the SEC and its “failure to protect the investing public” from FTX — saying Gensler was “singularly responsible.”

On Twitter, tech venture capitalist Adam Cochran charged the SEC was outright colluding with FTX while cracking down on two of the most high-profile, SEC-compliant exchanges.

“So the SEC got buddy-buddy with SBF and almost gave them an exception to offer more services in the US. But then goes after Kraken and Coinbase, the two most compliant US exchanges for services that the SEC previously refused to provide guidance on?”

“2/2 Gensler is not a regulator. He is an agent of an anti-crypto agenda, who only aims to wield his power as cudgel for those he doesn't agree with. So the big question then, is why didn't FTX get this treatment? Whose pocket is he in?”

Things are heating up for the SEC right at a time it wants more power and primary regulatory aegis for the digital assets and the crypto space.