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A series of emails obtained by Protect the Public’s Trust and shared with the Washington Examiner show the now-defunct FTX attempted to curry favor with the FDIC by arranging a first meeting with the regulator’s chairman just a few months before the exchange’s collapse.
Protect the Public’s trust is a watchdog that educates the public, largely through investigative research, about potential misconduct by U.S. government officials.
FTX.US’ head of policy at the time of the correspondence Mark Wetjen, who had previously served as commissioner for the Commodity Futures Trading Commission (CFTC) under Obama, emailed FDIC chairman Martin Gruenberg on behalf of Sam Bankman-Fried to pitch the exchange and schedule a meeting between the three.
“We are in the unusual position of begging the federal government to regulate us,” wrote Wetjen, who also claimed that he “strongly” believed that “the FTX [risk] model is all things considered a superior model."
Elsewhere in the email, Wetjen argues “the single best thing” the United States government can do to mitigate the risks of crypto is to regulate the exchanges, as they are “the gatekeepers for the [crypto] ecosystem.”
Later that same evening, Gruenberg replied “I’d be glad to meet with you and [then-CEO] Mr. Bankman-Fried.”
A spokesperson for the FDIC confirmed to the Washington Examiner that Gruenberg and FTX did have a “single meeting” in the end.
The FDIC's senior media relations officer Julianne Breitbeil told Decrypt that "chairmen of the FDIC have routine courtesy visits with leaders of financial firms and institutions.”
FTX did not immediately respond to Decrypt's request for comment.
FTX in the limelight
Once one of the industry’s largest cryptocurrency exchanges, FTX collapsed last November, following a multi-day bank run on the platform.
In the process of unraveling, it came to light that FTX executives had been misusing customer funds. Former CEO Bankman-Fried now faces up to 12 criminal charges—with eight charges from an earlier indictment—including wire fraud and conspiracy to commit money laundering.
Last week, several YouTube influencers were slapped with a $1 billion lawsuit—filed on Wednesday last week—for allegedly advertising unregistered securities to their viewers in the form of yield-bearing accounts offered by FTX.
Also on Wednesday, court documents in the ongoing FTX trial revealed that Bankman-Fried and his inner circle collectively received $3.2 billion in payments and loans, mostly from FTX’s sister company, quantitative trading firm Alameda Research. Bankman-Fried’s payouts account for the lion’s share of $2.2 billion.