Senators Probe CFTC Chair Over Links to FTX Founder Bankman-Fried

U.S. Senators Elizabeth Warren (D-Mass.) and Chuck Grassley (R-Iowa) have issued a formal request for information from Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam. 

The demand centers on Behnam’s interactions and communications with Sam Bankman-Fried, the ex-CEO of the cryptocurrency exchange FTX, which was declared bankrupt in November 2022 after a spectacular breakdown. The senators want a comprehensive record of all meetings, telephone conversations, and emails between Behnam and Bankman-Fried throughout the chairman’s term.

The investigation highlights a developing issue among U.S. lawmakers about the supervision and control of cryptocurrency markets.

“Safeguarding the savings and retirements of Americans requires Congress and market regulators like the CFTC to determine how this multi-billion-dollar crime was allowed to happen,” the senators stated in their letter.

This statement emphasizes the essential role of transparency and accountability in the relationships between financial regulators and business executives.

CFTC Chair History of Communication

In a Senate Agriculture Committee hearing in 2022, Chair Behnam revealed that he and his team had had about 10 meetings with Bankman-Fried and the other executives of FTX in the 14 months before the exchange’s collapse. These meetings were typical talks with the available market players. However, following the collapse of FTX and the criminal activities of its founder, these interactions have become the subject of thorough investigation.

The senators’ request is specified in a detailed list of the documents and communications to be submitted no later than April 29, 2024. The deadline is designed to allow the legislative body to quickly perceive the balance of the relationship between the CFTC and one of the most influential figures in the cryptocurrency market before the fall of this body.

Regulatory Engagement with FTX

The CFTC’s meetings with Bankman-Fried were not limited to periodic regulatory reviews. FTX (via its U.S.-based derivatives exchange) sought to introduce innovative products that had to be approved by the regulator. Many of these proposals brought FTX executives, such as Bankman-Fried, directly to the attention of CFTC officials. The talks were part of FTX’s broader agenda to grow its presence and operations in the regulated U.S. financial markets.

In addition, Behnam and other CFTC staff participated in assessing FTX’s applications for different crypto derivatives products. These applications played a large part in the discussions during the many meetings referred to by Behnam during his deposition.

The senators’ investigation of these interactions is part of a more general concern regarding the adequacy of regulatory review and the threats of conflicts of interest or undue influence in the approval processes of new financial products.

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