{"id":1739728,"date":"2022-11-15T11:31:32","date_gmt":"2022-11-15T16:31:32","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1739728"},"modified":"2022-11-15T12:48:40","modified_gmt":"2022-11-15T17:48:40","slug":"alleged-fraud-romance-and-regulatory-neglect-the-ftx-scandal-deepens","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/alleged-fraud-romance-and-regulatory-neglect-the-ftx-scandal-deepens\/","title":{"rendered":"Alleged Fraud, Romance, and Regulatory Neglect: The FTX Scandal Deepens"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Falleged-fraud-romance-and-regulatory-neglect-the-ftx-scandal-deepens%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1739728&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p><em>News Analysis<\/em><\/p>\n<p>U.S. politicians are calling for stricter regulations on the cryptocurrency industry as a result of the <a href=\"https:\/\/www.theepochtimes.com\/t-ftx\">FTX<\/a> <a href=\"https:\/\/www.theepochtimes.com\/pensioners-investment-firms-sovereign-funds-lose-big-amid-ftx-bankruptcy_4858399.html\">bankruptcy<\/a> and potential fraud.<\/p>\n<p>\u201cIt shows the weaknesses of this entire sector,\u201d Secretary of the Treasury Janet Yellen <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-11-12\/yellen-says-ftx-debacle-shows-need-for-crypto-regulation?utm_source=google&#038;utm_medium=bd&#038;cmpId=google&#038;leadSource=uverify%20wall\" target=\"_blank\" rel=\"noopener\">told<\/a> Bloomberg on Nov. 12, emphasizing the need for \u201cvery careful regulation.\u201d<\/p>\n<p>\u201cThe notion you could use the deposits of customers of an exchange and lend them to a separate enterprise that you control to do leveraged, risky investments\u2014that wouldn\u2019t be something that\u2019s allowed,\u201d Yellen continued, referring to reports that FTX <a href=\"https:\/\/www.theepochtimes.com\/pensioners-investment-firms-sovereign-funds-lose-big-amid-ftx-bankruptcy_4858399.html\" target=\"_blank\" rel=\"noopener\">loaned<\/a> customer funds to sister company Alameda Research, a <a href=\"https:\/\/web.archive.org\/web\/20221013160142\/https:\/www.alameda-research.com\/\" target=\"_blank\" rel=\"noopener\">self-described<\/a> \u201c<a href=\"https:\/\/www.theepochtimes.com\/t-crypto\">crypto<\/a> trading firm.\u201d<\/p>\n<p>One of the top-ranking members of the House Financial Services Committee, Rep. Patrick McHenry (R-N.C.), weighed in as well. \u201cThe recent events show the necessity of congressional action,\u201d he wrote in a <a href=\"https:\/\/republicans-financialservices.house.gov\/news\/documentsingle.aspx?DocumentID=408466\">press release<\/a>. \u201cIt\u2019s imperative that Congress establish a framework that ensures Americans have adequate protections.\u201d<\/p>\n<p>A financial scandal of this sort would typically fall under the purview of the Securities and Exchange Commission (SEC), and, indeed, SEC Chair Gary Gensler did meet with the staff of FTX as early as March, with follow-up meetings thereafter, according to a <a href=\"https:\/\/www.foxbusiness.com\/markets\/sec-chairman-gary-gensler-met-with-head-ftx-months-before-collapse\">Fox Business report<\/a>.<\/p>\n<p>Some have pointed to these meetings as examples of negligence and possible collusion.<\/p>\n<p>John Berlau, director of finance policy at the Competitive Enterprise Institute, told The Epoch Times that \u201cthere are many laws against fraud and deception already on the books that could and should be enforced if they apply.\u201d<\/p>\n<p>\u201cThe SEC should also be faulted for focusing on \u2018woke\u2019 agenda items such as ESG mandates for public companies,\u201d Berlau went on. \u201cIt should drop its pending regulations such as climate disclosure rules that do little to address investors\u2019 needs, and rededicate its time and resources to investigating and punishing true investor fraud.\u201d<\/p>\n<p>The SEC didn\u2019t immediately respond to a request for comment.<\/p>\n<p>Former National Security Agency subcontractor and U.S. fugitive Edward Snowden made bolder allegations about the SEC chair. Snowden alluded to the hypocrisy of Gensler\u2019s leniency toward FTX while, earlier this year, the U.S. government <a href=\"https:\/\/home.treasury.gov\/news\/press-releases\/jy0916\">banned<\/a> Tornado Cash, a cryptocurrency designed to facilitate anonymous transactions.<\/p>\n<p>In August, the Department of the Treasury sanctioned Tornado Cash on the grounds that state-backed North Korean hackers utilized Tornado\u2019s \u201cmixer platform\u201d to launder illicit funds.<\/p>\n<p>\u201cThe White House sanctions and arrests kids for the \u2018crime\u2019 of building privacy tools to protect you, while \u2018regulators\u2019 were quietly palling around with the thieves who just robbed 5 million people,\u201d Snowden <a href=\"https:\/\/twitter.com\/Snowden\/status\/1591848718243954693\">stated<\/a> on Twitter. \u201cThe difference? The thieves were big political donors.\u201d<\/p>\n<p>After financier George Soros, former FTX CEO Sam Bankman-Fried was the Democratic Party\u2019s second-largest donor in the 2021\u201322 campaign, donating $39.8 million.<\/p>\n<figure id=\"attachment_4097382\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2021\/11\/10\/Gary-Gensler--1200x849.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-full wp-image-4097382\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/Gary-Gensler-.jpg\" alt=\"Gary-Gensler\" width=\"2435\" height=\"1722\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4097382\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/Gary-Gensler-.jpg\" alt=\"Gary-Gensler\" width=\"2435\" height=\"1722\" \/><\/noscript><\/figcaption><\/a> U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee oversight hearing on the SEC on Capitol Hill in Washington, on Sept. 14, 2021. (Evelyn Hockstein\/Reuters)<\/figure>\n<h2>Sister Company<\/h2>\n<p>Many allegations have been leveled against Bankman-Fried and high-ranking FTX executives as well.<\/p>\n<p>An <a href=\"https:\/\/www.coindesk.com\/business\/2022\/11\/10\/bankman-frieds-cabal-of-roommates-in-the-bahamas-ran-his-crypto-empire-and-dated-other-employees-have-lots-of-questions\/\">article<\/a> by crypto media outlet CoinDesk cites anonymous insiders claiming Bankman-Fried, Caroline Ellison, CEO of sister company Alameda Research, and other executives lived together in a Bahamian mansion and were \u201cpaired up in romantic relationships with each other.\u201d<\/p>\n<p>Another crypto outlet, CryptoSlate,\u00a0<a href=\"https:\/\/cryptoslate.com\/was-ftx-hacked-deep-dive-reveals-backdoor-built-into-accounting-software\/\">claims<\/a> to have confirmed that late in the evening on Nov. 11, Bankman-Fried \u201csecretly moved $10 billion in [FTX] funds to Alameda trading firm via software \u2018backdoor.\u2019\u201d<\/p>\n<p>FTX didn\u2019t respond to requests for comment.<\/p>\n<p>Social media users are demanding answers to these mysteries, with many wild theories blooming across Twitter.<\/p>\n<p>Marc Cohodes, a veteran short seller, <a href=\"https:\/\/twitter.com\/AlderLaneEggs\/status\/1592145529256824833?s=20&#038;t=oWDliNHAUryE8yoWco5Mpw\">claimed in a tweet<\/a> that he attempted to disclose information about FTX to Bloomberg\u2019s crypto team months before. Cohodes is known for <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-02-23\/ceo-who-blamed-his-cancer-on-short-sellers-set-for-sentencing#xj4y7vzkg\">exposing<\/a> biomedical company MiMedx for committing securities fraud.<\/p>\n<p>\u201cI was onto SBF for many months. It just did not add up. I have been around the fraud business for decades, and this guy ticked all the boxes,\u201d the tweet read, referring to Sam Bankman-Fried.<\/p>\n<p>\u201cI handed the story to the head of the Bloomberg Crypto in London, which consists of five people\u201d he explained. \u201cThey passed on it because they thought it was too hard, too complicated, and might interfere with gaining access to SBF going forward.\u201d<\/p>\n<p>Bloomberg didn\u2019t immediately respond to a request for comment.<\/p>\n<p>Bankman-Fried\u2019s future remains a mystery. His latest act involves a series of cryptic tweets wherein the FTX founder appears to be gradually spelling out \u201cwhat happened.\u201d<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">1) What<\/p>\n<p>\u2014 SBF (@SBF_FTX) <a href=\"https:\/\/twitter.com\/SBF_FTX\/status\/1591989554881658880?ref_src=twsrc%5Etfw\">November 14, 2022<\/a><\/p>\n<\/blockquote>\n<h2>More Oversight?<\/h2>\n<p>In response to the scandal, crypto industry leaders have called for more oversight.<\/p>\n<p>While speaking at the G20 summit in Bali, Indonesia, this weekend, Binance founder and CEO Changpeng Zhao <a href=\"https:\/\/www.aljazeera.com\/economy\/2022\/11\/14\/binance-ceo-says-crypto-sector-needs-clear-and-stable-regulations\">said<\/a>, \u201cWe do need some regulations, we do need to do this properly, we do need to do this in a stable way.\u201d The FTX crisis was initially <a href=\"https:\/\/www.theepochtimes.com\/crypto-platform-ftx-goes-bankrupt-boss-resigns_4857569.html\">triggered<\/a> after Zhao publicly questioned the stability of its operations and announced Binance would be unwinding its position in FTX\u2019s proprietary token.<\/p>\n<p>Brian Armstrong, founder and CEO of Coinbase, <a href=\"https:\/\/www.cnbc.com\/2022\/11\/11\/op-ed-crypto-markets-need-regulation-to-avoid-ftx-type-situations.html\">charges<\/a> \u201cunethical business practices\u201d as the core problem at FTX and argues crypto, by its nature, should facilitate efficient regulatory oversight as \u201cblockchain technology will make it easier to track and prosecute over time.\u201d<\/p>\n<p>He stressed the need for \u201csmarter regulation\u201d as opposed to \u201cheavy-handed,\u201d saying \u201cregulators need to establish clear rules that bring crypto back on-shore, encourage innovation, and protect consumers.\u201d<\/p>\n<p>Others believe government policies are to blame for the environment that fostered the FTX scandal to begin with.<\/p>\n<p>Peter Schiff, an economist and founder of Euro Pacific Asset Management, told The Epoch Times that \u201cbut for zero interest rate policy and quantitative easing, there would not have been such a large speculative bubble in crypto and investors would have been more careful.\u201c<\/p>\n<p>\u201cI do think lots more regulation is coming, but it will not save crypto,\u201d Schiff said. \u201cIt will only hasten its demise\u201d<\/p>\n<p>In a recent podcast, Schiff quoted former Libertarian presidential nominee Harry Brown who once said, \u201cThe government is good at one thing. It knows how to break your legs, and then hand you a crutch and say, \u2018See, if it weren\u2019t for the government, you wouldn\u2019t be able to walk.\u2019\u201d<\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-liam-cosgrove\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/LiamCosgrove_WEB.jpg\" alt=\"Liam Cosgrove\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Liam Cosgrove works as a freelance journalist covering business, markets, and finance. He received his bachelor&#8217;s degree in mathematics from the University of California, Santa Barbara.<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>News AnalysisU.S. politicians are calling for stricter regulations on the cryptocurrency industry as a result of the FTX bankruptcy and potential fraud. \u201cIt shows the weaknesses of this entire sector,\u201d<\/p>\n","protected":false},"author":1,"featured_media":1739731,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1739728","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1739728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1739728"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1739728\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1739731"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1739728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1739728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1739728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}