FTX Founder Allegedly Sought Federal Regulation Before Collapse
FTX founder Sam Bankman-Fried allegedly sought federal regulation for the crypto exchange before its collapse and his resignation as CEO. A leaked email exchange with a top regulator showed Bankman-Fried's intent to meet with the Federal Deposit Insurance Corporation chairman in June 2022.
FTX was one of the most important cryptocurrency exchanges prior to its failure, which coincided with the creator and CEO, Sam Bankman-Fried, resigning from his position. The platform's image, on the other hand, was damaged by charges of the theft of cash belonging to its users. Despite this, it was revealed that Bankman-Fried was attempting to have FTX subject to government regulation in an email exchange from May of 2022 that was stolen.
According to the Washington Examiner, Bankman-Fried contacted Martin Gruenberg, the chairman of the Federal Deposit Insurance Corporation (FDIC), in May 2022 and invited him to a meeting on June 13, 2022. This communication was made possible by Mark Wetjen, a former commissioner of the Commodities Futures Trading Commission (CFTC) who had only just started working for FTX US in the role of head of policy and regulatory strategy.
Based on the flow of emails, it was clear that Bankman-Fried was attempting to "promote discourse" and "starting examining" the prospect of FDIC regulation for FTX. This action was probably taken as a reaction to the rising regulatory scrutiny that bitcoin exchanges in the United States are now under. On the other hand, it is not known whether or not the meeting with Gruenberg actually took place, nor can it be established whether or not FTX was successful in its attempt to get federal regulation.
The failure of FTX in November 2022 may be attributed to a number of issues, including claims of fraudulent activity and poor management. In the wake of the collapse, Bankman-Fried stepped down from his position as CEO, although he continues to be a significant role in the bitcoin sector. Bankman-attempts Fried's to seek government regulation for the exchange may have been a symptom of his intention to establish FTX as a reputable and trustworthy platform, notwithstanding the controversy that surrounds FTX.