Gary Gensler, the Chair of SEC, became the most berated supervisory authority accused by the public when the FTX Derivatives Exchange crumbled by declaring bankruptcy last year. The public faulted Gary Gensler for the collapse of the FTX Derivatives Exchange.
Because of the strong relationship between Sam Bankman-Fried and the governing bodies, the red flags displayed by the trading platform went unnoticed.
The relationship between Gensler & Bankman-Fried was brought up during an exclusive interview (1) with the Intelligencer's journalist, Ankush Khardori. Since he took office, Gensler and Bankman-Fried have only met a couple of times between them.
One of these meetings took place in March of the previous year and was attended by a team of officials from the FTX and the IEX stock exchange. The purpose of the meeting was to present the SEC with evidence supporting a trading platform that the federal government has approved.
Because FTX had a severe financial incentive to seek such an exchange, according to Gensler's assessment, this plan was declared dead on arrival as soon as it was presented.
During the in-depth discussion, Gensler shared his thoughts on a variety of topics, including the following:
"I suggested to them that they might take their slide deck down to the second slide," he said, "and that I didn't think they ought to – with all regard – consider it to be a helpful use of their time."
The only previous time Bankman-Fried and Gensler had met was in 2021, and it served as the basis for the allegations that the troubled 30-year-old executive had the regulations in his pocket. Especially in light of the recent actions taken against Kraken Exchange, allegations regarding Gensler's lack of objectivity are becoming more prevalent.
Earlier this month, the SEC levied a fine against the trading platform for $30 million providing Staking as a Service to users in the United States. The Chief Executive Officer of Kraken, Jesse Powell, believes that the SEC is simply making the good guys the scapegoats while allowing the bad guys to go away scot-free.
Gary Gensler vs. Crypto Industry
According to the rules governing securities in the United States, the answer to the question of what qualifies as security continues to be a contentious topic within the cryptocurrency ecosystem.
All though the commission has been locked in a legal struggle with Ripple Labs Inc. since late 2020, it may also become involved in a dispute with Paxos Trust regarding issuing Binance USD stablecoin as an unregistered security.
Gensler thinks that the rationale is understandable despite this viewpoint's seeming contradiction.
Gensler stated that for "everything else" besides bitcoin, "you can find a webpage, you can locate an organization of entrepreneurs," who "might set up their corporate structures in a tax shelter abroad, they may establish a foundation, they might lawyer it to attempt to arbitrage and make it difficult jurisdictionally or so forth."
According to him, this particular set of businesspeople will frequently discover a means to sell their tokens to the general public, who, in turn, anticipates making some profits from their investment over the long term.
Regardless of how the commission chooses to portray its position, the conclusion of the case it brought against Ripple will surely establish a significant precedent for the industry in the years to come.