Emails Reveal Sam Bankman-Fried’s Courtship With Federal Regulators

Before his arrest in mid-December, cryptocurrency billionaire Sam Bankman-Fried repeatedly claimed that he was a responsible business leader who sought more cryptocurrency regulation and wanted his industry to be part of the mainstream financial system.

But now that the Commodity Futures Trading Commission, the Securities and Exchange Commission and the Justice Department are prosecuting the 30-year-old for fraud, the extensive professional relationships he cultivated with current and former federal regulators risk embarrassment for all those involved.

As CEO of FTX, a crypto exchange, Bankman-Fried hired several former federal regulators who helped connect him with senior officials in the CFTC, the agency he hoped would be in charge of regulating his industry, the emails show.

Many of Bankman-Fried’s top deputies were former regulators. Ryne Miller, FTX’s general counsel, previously served as legal counsel to Gary Gensler, then-CFTC chairman who is now SEC chairman.

Mark Wetjen, FTX’s former head of policy and regulatory strategy and current director of LedgerX, a subsidiary of FTX, previously served as acting chairman and commissioner of the CFTC after being appointed to the position by President Obama.

Jill Sommers, another former CFTC commissioner, also served on FTX’s US Derivatives Board of Directors.

Miller helped arrange for Bankman-Fried to meet and ring with former CFTC Commissioner Dan Berkovitz, the current General Counsel of the SECemails obtained by The Times through a Freedom of Information Act request program.

Miller hosted the October 2021 dinner for Berkovitz and Bankman-Fried at Rasika West End, an upscale Indian restaurant in Washington, D.C. Zach Dexter, CEO of FTX affiliate Ledger X, Wetjen, and Michelle Bond, director general of the Assn. . . by Digital Assets Markets, were also invited to the dinner, but records do not clarify whether they attended.

“I think the last time I went with you was to your CFTC to go to dinner with Gary, in 2013,” Miller wrote to Berkovitz. Emails show Berkovitz paid Miller his $50 share of the dinner.

Miller also invited CFTC Commissioner Dawn Stump to dine with Bankman-Fried or visit FTX’s offices in Chicago in November. 3, 2021. It is not known if Stump accepted the invitation; She could not be reached for comment. Stump left his position at the CFTC in April to work at Solidus Labs, a cryptocurrency company.

“I will not comment. I understand the questions, but I’m not commenting on the inquiries right now,” Miller told The Times when asked about the emails.

The SEC declined to comment on Berkovitz’s role in the current case against Bankman-Fried and other FTX and FTX-affiliated employees. On the same day The Times asked questions about his role, Berkovitz announced his resignation of the SEC, effective in January. 31, 2023.

Months before the dinner with Berkovitz, Wetjen requested an urgent meeting with current CFTC Chairman Rostin Behnam and David Gillers, Behnam’s chief of staff, to discuss LedgerX.

“I am anxious to find time to discuss with you a LedgerX matter of considerable urgency,” Wetjen wrote to Behnam in August. 26, 2021. “Could you accept a request to have a brief discussion about this? Thank you very much for your consideration.”

Wetjen, LedgerX CEO Dexter, and others were able to secure a meeting with Behnam a few hours later.

Wetjen could not be reached for comment.

“These few emails show that the CFTC had an open-door policy to meet basically whenever FTX wanted to meet, including [with] the acting chair,” Dennis Kelleher, president of Better Markets, a nonprofit that advocates for financial regulation, told The Times. “FTX hired former CFTC officials for the purpose, obviously, of accessing and influence the CFTC, where FTX had a radical proposal pending to dramatically change the structure and operations of clearinghouses.”

In December 1, Behnam told the Senate Agriculture Committee that he met with Bankman-Fried numerous times to discuss the CFTC’s consideration of the FTX offset application. Bankman-Fried took a “dogged approach,” Behnam said.

“Over the past 14 months, we met 10 times at the CFTC office at their request, all in connection with … this clearing application,” Behnam added. “There were very, very strong feelings about this application. And I felt that I needed to be engaged as the agency president who met directly with FTX and Mr. Bankman-Fried.”

The clearinghouse’s application was never approved, said Steven Adamske, a spokesman for Behman.

Bankman-Fried was scheduled to testify before the House Financial Services Committee in December. 13, but was arrested in the Bahamas the night before. On his written testimony preparedBankman-Fried planned to say he was pressured into signing Chapter 11 bankruptcy papers that released his control of the now-bankrupt company.

“Most of that pressure came from Ryne Miller,” Bankman-Fried wrote in prepared testimony, adding that attorneys at Sullivan & Cromwell, the law firm overseeing the bankruptcy proceedings, also they pressed “They also called many of my friends, co-workers and family … some of whom were emotionally damaged by the pressure. Some of them came to me, crying.”

Bankman-Fried was extradited to the United States to stand trial in the Southern District of New York. On Thursday, he was released into the custody of his parents on a $250 million bond.

“We believe this is the largest pretrial bail ever,” Assistant U.S. Attorney Nicolas Roos said. said. Bankman-Fried will be permitted to travel from her parents’ home in Palo Alto to the U.S. District Court for the Northern District of California.

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