Was SEC Chair Gary Gensler Helping Sam Bankman-Fried Find Legal Loopholes for FTX? Here’s What You Need to Know
Speculation is mounting in the community that Securities and Exchange Commission (SEC) chairman Gary Gensler could have worked with FTX co-founder Sam Bankman-Fried to find legal loopholes the exchange could take advantage of.
The speculation has emerged as ties between Sam Bankman-Fried, his parents Joseph Bankman and Barbara Fried, and prominent figures at the top level of government and regulatory agencies in the US, have been uncovered in recent days. And to top things off, Bankman-Fried himself is also a major political donor, first and foremost to the Democratic Party.
The rumor mill has in recent days become so intense that Republican Rep. Tom Emmer, known as one of the most crypto-friendly members of the House of Representatives, tweeted that he has received reports that Gary Gensler was helping Bankman-Fried “work on legal loopholes to obtain a regulatory monopoly.”
“We’re looking into this,” the crypto-friendly politician added.
Notably, the tweet from Emmer came a day after an article in Fortune revealed that Bankman-Fried’s mother, Barbara Fried, is the leader of a group known as Mind the Gap that raises money from the tech industry for Democrats.
In a 2020 article in The Stanford Daily, Mind the Gap was described as a “secretive Stanford-connected Democratic fundraising group” that funneled more than $20m to Democratic candidates in the 2018 House of Representatives election.
Meanwhile, Bankman-Fried’s father, Stanford law professor Joseph Bankman, also has close ties to leading politicians. He has in the past drafted tax legislation for Senator Elizabeth Warren, a Democrat well-known for her opposition to crypto and crypto mining in particular.
SEC chair Gary Gensler also has ties to the Democratic Party, and previously served as the finance chair for Hillary Clinton’s presidential campaign.
“It’s not a stretch to imagine [Sam Bankman-Fried] sought to exploit these political ties to his benefit,” the Fortune article said, while also adding that now is “a good time for skeptics to ask why [Gensler] failed to stop FTX in the first place—and if anyone else in high places had a role in enabling this debacle.”
Lastly, and perhaps not surprisingly, speculation on the ties between Bankman-Fried and prominent government figures is also running rampant in the community.
Among those who have voiced their opinion is the popular crypto Twitter user Tara Bull, who asked if FTX was “used to launder money for the democratic party?”
“A question worth asking,” responded the new Twitter owner and well-known Dogecoin fan Elon Musk.
SBF was born and raised in the Golden State, according to a 2021 Yahoo! News profile. He grew up in an academic setting, with parents who were law professors at Stanford University. And that background seemed to affect his thinking. His mother, Barbara Fried, told Yahoo! that when her son started reading the philosopher Derek Parfit at age 14, he took Parfit to task. “Sam was mad at Parfit for being wrong, but madder at Parfit for the cheapness of his argument,” she said.
From Gizmodo: “Both of the crypto founder’s parents are blue on Wikipedia: Barbara Fried and Joseph Bankman are professors at Stanford Law School. Bankman worked with his son’s companies. SBF’s aunt, Linda P. Fried, is also dean at Columbia University’s school of public health.”
* That Stanford Law Professor might have some awkward questions coming his way. Lawyers have actual ethical rules they’re required to follow—if he’s actually currently licensed to practice (which I assume a law professor would still be, even if they weren’t actively practicing), it is going to be really fun for him to explain to the bar exactly how his son managed to perpetuate the exact kinds of securities fraud he himself would be incredibly aware of (Google seems to indicate that the father teaches financial law?).
Crypto is not actually regulated like securities, so those laws likely weren’t broken (more general laws like fraud… who knows). But you don’t need to actually commit a crime to get disbarred in most states (or to get forced out of your cushy university gig). You just need to make the legal profession as a whole look bad.
The very specific knowledge his parents have makes me seriously wonder how involved in this scam they were. A couple of experts on the legal nuances of the financial system just happen to have their son follow the exact playbook of old-school financial crimes?
* I looked up his dad couple days ago, and it looks like he teaches regulatory frameworks related to start ups. So he might have been instrumental in setting up the company in the Bahamas and in Hong Kong in the past. Still, that makes him highly liable. I am not a lawyer but it does look very shady especially if he is a law professor at Stanford of all places.
* SBF and the rest of his Effective Altruism polycule blew through $billions of other people’s money & can’t pay them back?
Doesn’t sound very cash money altruism to me, but what do I know?
Follow the Money:
– Sam raises a total of $1.7B for FTX
– 2nd Biggest donor to Biden 2020 campaign
– Investors include Blackrock, Sequioa, SoftBank and Tiger Global
– FTX covers Alameda losses with $10B of users funds https://t.co/qujqVTOhvc
— No 🔑 No 🧀 (@bitcoinzay) November 11, 2022
