SEC boss Gary Gensler faces ethics scrutiny over Sam Bankman-Fried meeting

Source: Cointelegraph

Questions are multiplying around a 45-minute Zoom call that SEC Chair Gary Gensler held in March 2022 with disgraced crypto mogul Sam Bankman-Fried — including whether the controversial powwow got advance approval by the agency’s ethics team, On The Money has learned.

The now-infamous virtual meeting — which came six months before Bankman-Fried was arrested on epic fraud charges — has stoked criticism of Gensler over alleged conflicts of interest and cozy ties to the 31-year-old accused fraudster.

Now, a document recently obtained through the Freedom of Information Act shows that there is no record that Gensler ever requested permission from the SEC’s Office of the Ethics Counsel to meet with SBF.

Not only is that a breach of the agency’s own protocol, it’s also likely that if Gensler had asked for permission he would have been refused, according to experts.

A spokesman for the SEC said Gensler had approval for the meeting from the SEC’s ethics team but would not produce any documentation to support the claim.

The SEC declined further comment despite repeated requests for clarification

“The fact that the SEC appears unwilling to share all the documentation associated with the vetting of this meeting should raise enormous red flags for investigators,” Thomas Jones, president of the American Accountability Foundation, told On The Money.

“These types of special-access meetings are where some of the worst abuses in Washington happen and the American people need to know what happened in the lead up to this meeting.”

Multiple sources at the SEC said commissioners typically use email to request a meeting with the Ethics office and create a paper trail.

“The reason you put it in an email is you want to get it in writing so you can cover your ass,” a former SEC official told On The Money. “What’s the point of doing it if it’s not in writing?”

“It’s a little suspect to me that the SEC is disputing FOIA but won’t back it up,” another former counsel at the SEC said.

Gensler’s failure to vet the meeting is particularly noteworthy given the apparent conflicts he faces in the case, according to experts.

FTX’s then-lobbyist Mark Wetjen served as a commissioner of the Commodity Futures Trading Commission at the same time Gary Gensler helmed the CFTC.

Wetjen, who has remained close to Gensler, was responsible for setting up the meeting, according to reports.

“The FTX case is one of the most significant financial frauds in decades,” Jones said. “FTX hired one of Gary Gensler’s closest allies to serve as their ‘lobbyist’ in Washington and then got an unprecedented direct meeting with Gensler to plead their case.”

Meanwhile, Glenn Ellison – the father of Alameda Research CEO Caroline Ellison, SBF’s ex-girlfriend who has since turned informant to the feds – was the head of MIT’s economics department while Gensler was a professor there.

While it’s unclear whether the SEC was looking into FTX or its disgraced CEO at the time, people close to the SEC say they believe Ethics would have advised against meeting with SBF given that so little was known about the exchange — and that it wasn’t even headquartered in the US.

“It’s a huge failure in judgment from Gensler,” according to Jones. “It speaks to Washington’s ‘swampy-ness’ that Gensler would take that meeting.”

On the call, Bankman-Fried reportedly discussed the possibility of launching a new crypto trading platform with Brad Katsuyama’s IEX. SEC insiders say it is highly unusual for an SEC Chair to discuss a work-in-progress.

SBF reportedly bragged about having access to Gensler.

Indeed, the friendly chat stood in contrast to what most cryptocurrency companies get — even those based in the US. Coinbase CEO Brian Armstrong has slammed the SEC multiple times for its unwillingness to meet with him. Indeed, a 45-minute meeting with an SEC chair is an “eternity,” according to Jones. “Carving out that much time is a big lift.”

Coinbase has been the subject of numerous SEC probes. This month, the SEC alleged in a lawsuit that Coinbase’s crypto asset trading platform was operating as an unregistered exchange.

Others note that Gensler’s decision to take the meeting without clearing it is indicative of the way he operates at the SEC. The agency raised eyebrows when it waited to charge SBF Bankman-Fried until the day after he was extradited to the US by the Department of Justice.

“When it comes to government failure, the public official singularly responsible for failing to expose the FTX fraud is SEC Chair Gary Gensler,” said Ritchie Torres, a Democratic Congressman from New York.

Source: New York Post

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