Source: Third Way Think Tank (Flickr)
A Democratic congressman is calling for an independent investigation into the Security and Exchange Commission’s failure to prevent the historic collapse of crypto exchange FTX.
In a strongly worded letter sent Tuesday, Representative Ritchie Torres (D-NY) called upon the Government Accountability Office (GAO) to conduct an independent review of the SEC’s actions—or lack thereof—in the months leading up to FTX’s implosion last month.
The letter specifically singled out SEC chair Gary Gensler for claiming exclusive regulatory dominion over crypto exchanges, while simultaneously failing to meaningfully regulate them.
“If the SEC has the authority Mr. Gensler claims, why did he fail to uncover the largest crypto Ponzi scheme in US history?” Torres wrote. “One cannot have it both ways, asserting authority while avoiding accountability.”
The letter minced no words in claiming that Gensler is therefore “singularly responsible for the regulatory failures surrounding the collapse of FTX.”
Torres went on to attack Gensler’s character and motivations, criticizing his decision to investigate celebrities like Kim Kardashian instead of crypto exchanges like FTX.
In October, the SEC fined Kardashian $1.26 million for promoting EthereumMax, a cryptocurrency the agency determined to be an unregistered security. The day of the charge, the SEC rolled out a flashy video starring Gensler to promote awareness of the action—an uncommon practice in the typically bone-dry realm of securities regulation.
“The operating principle of the SEC must be protection for the investing public, rather than publicity for the political appointee in charge,” Torres wrote Tuesday.
“Mr. Gensler’s leadership has left the career staff at the SEC fundamentally demoralized to an extent rarely seen, with the SEC Inspector General reporting the highest attrition rate in a decade,” Torres wrote.
One of Gensler’s colleagues, SEC Commissioner Hester Peirce, previously told Decrypt that Gensler’s approach is “not a good way of regulating,” and that many people have rightfully “given up on us.”
“To what extent has Mr. Gensler’s demoralization of his own workforce crippled the Commission in the performance of its duty to protect investors?” Torres wrote. “The public deserves an answer.”
Source: DeCrypt
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