Sam Bankman-Fried Was in Close Talks with CFTC for 14 Months before FTX Collapse

UTC by Bhushan Akolkar · 3 min read
Sam Bankman-Fried Was in Close Talks with CFTC for 14 Months before FTX Collapse
Photo: Unsplash

The CFTC chair accepted that he had conducted nearly 12 meetings with SBF in the last 14 months before bankruptcy. SBF was looking to secure a clearinghouse license for FTX subsidiary LedgerX.

It’s not a new story that FTX‘s disgraced founder Sam Bankman-Fried was in close contact with US lawmakers. However, the latest report suggests that Bankman-Fried also met with some high-level officials at the US Commodities and Futures Trading Commission (CFTC) more than 10 times over the last 14 months.

Bankman-Fried vs CFTC

One of his meetings was also with the CFTC chairman Rostin Behnam. On Thursday, December 1, the CFTC chair testified before the Senate Committee on Agriculture, Forestry, and Nutrition which oversees that nation’s commodities market.

Speaking to the senators, the CFTC chair said that SBF’s meetings were around FTX’s “dodged” desires to amend the clearinghouse license for LedgerX LLC, which crypto exchange FTX acquired last year in 2021.

The amendment would allow FTX to directly sell crypto derivatives without the involvement of intermediaries. However, the proposed change is still pending approval at the time FTX filed for bankruptcy last month. Speaking to committee chair Sen. Debbie Stabenow, D-Mich, Behman said:

“My team and I met with Mr. Bankman-Fried and his team. Over the past 14 months, we met 10 times in the CFTC office at their request all in relation to this (derivatives clearing organization); this clearinghouse application.”

However, Behman said that LedgerX has been registered with CFTC since 2017. It was one of the few FTX entities that haven’t filed for bankruptcy. Behman added:

“The CFTC has been in near-daily contact with LedgerX as well as the third-party custodians it uses to hold cash and digital assets. Based on the information presented to us, at this time, LedgerX customer property remains secure and LedgerX has the financial resources to continue operating for the foreseeable future.”

FTX-Backed Bill On Hold Until Next Congress

Ever since the collapse of the crypto exchange FTX, the Digital Commodities Consumer Protection Act, or DCCPA, having an association with SBF has come under scrutiny.

While speaking to the CFTC chair on Thursday, Senate Agriculture Committee Chair Debbie Stabenow, D-Mich. said that bill is on hold until the next Congress in 2023.

“We look forward going into the new year, given the fact that this is December,” said Stabenow. Senator Sherrod Brown also added: “It’s not even close to being in the form that it will be in”. However, he signaled more openness to Behman’s question of having greater regulatory authority over crypto commodities. “I’m certainly open to him having that authority,” added Senator Brown.

CFTC chairman Rostin Behnam also clarified that there’s no “turf war” between the government agencies over the regulation of digital assets. He also emphasized cooperation with the U.S. SEC which has more resources and a broader purview. “This is about two agencies working together, doing what we’ve done historically,” Behnam said.

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