Ripple CEO Brad Garlinghouse has bashed US Securities and Exchange Commission (SEC) Chairman Gary Gensler for failing to investigate bankrupt cryptocurrency exchange FTX prior to the firm’s downfall.
In response to a Wall Street Journal opinion piece questioning Gensler’s failure to foresee the FTX collapse, Brad Garlinghouse says it’s shameful that the SEC chair was caught off guard by the debacle, despite meeting with Bankman-Fried multiple times.
This 100%!
— Brad Garlinghouse (@bgarlinghouse) December 20, 2022
It’s ridiculous and frankly shameful that Chair Gensler was touting the SEC’s enforcement actions as the “cop on the beat,” yet (per public reports) MET with SBF multiple times, but was caught completely flat-footed when the alleged fraud finally came to light. https://t.co/Qq8kPvXcvz
It is ridiculous and frankly shameful that Chairman Gensler touted SEC enforcement actions as a ‘cop on patrol,’ when (according to public reports) he met with Bankman-Fried. on several occasions, but was caught out when the alleged fraud finally came to light. He Tweeted.
The SEC sued Ripple in late 2020 on allegations that it sold XRP as an unregistered security, but no investigation was launched into FTX prior to its huge collapse.
Gary Gensler has been referred to as the “bad cop” of the digital asset industry since taking over as SEC chairman. Over the last 18 months, Gensler has taken a tough stance toward the crypto market, enforcing stringent policies to ensure industry participants follow regulations and fining a number of crypto companies and promoters for securities violations.
This led companies like BlockFi to pay up to as much as $100 million in penalties for registration failures. Last year, industry participants urged Gensler to seek congressional authorization before the SEC could regulate cryptocurrency products.
Citing the case of BlockFi, pro-XRP attorney John E. Deaton says that the SEC’s enforcement actions may have penalized firms that violated regulations, but they did not set any precedents or guidelines.
“Everyone should ask Gary Gensler and the SEC what changed when BlockFi agreed to and paid $70M of the $100M imposed by Gensler?BlockFi was making payments to the SEC for God’s sake. The SEC is the 2nd largest creditor in the BlockFi Bankruptcy!” reads his Dec 18 Tweet.
After FTX went bankrupt last month, Bankman-Fried was accused and charged with fraud and illegal campaign contributions. The SEC joined the CFTC in charging SBF with mishandling investor funds. He was arrested recently in the Bahamas.
