Brad Garlinghouse, the CEO of Ripple, has criticized SEC director Gary Gensler for failing to look into the failed crypto exchange firm FTX before the collapse of the crypto trading company. In reaction to a Wall Street Journal (WSJ) report that questioned Gensler’s locations while FTX’s former Chief executive Sam Bankman-Fried (SBF) embezzled consumers’ money, Garlinghouse made the remark.
According to Allysia Finley, a member of the WSJ editorial board, Gensler is attempting to use the FTX meltdown as a warning about the unregulated crypto market. Allysia still wonders when Sam Bankman-Fried used money from FTX clients to support dangerous bets and a luxurious life at his trading firm Alameda Research, where the SEC’s sheriff was.
For months Gary Gensler claimed to have authority over crypto and warned about self-dealing at their exchanges. Why didn’t he investigate FTX? asks @AllysiaFinleyhttps://t.co/GdfR4XHwOm
— Wall Street Journal Opinion (@WSJopinion) December 19, 2022
Garlinghouse’s remarks: Slams at Gensler
In response to the story, Garlinghouse determined that Finley’s query was accurate. Today, Gensler claimed the SEC’s enforcement action is the “policeman on the beat” for cryptocurrencies. However, Gensler was caught off-guard when the FTX fraud occurred, according to a tweet from Garlinghouse.
This 100%!
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
— Brad Garlinghouse (@bgarlinghouse) December 20, 2022
Garlinghouse argued that it is absurd and downright disgraceful that Chair Gensler, who was praising the SEC’s enforcement activities as the cop on the beat, met with SBF numerous times before being caught off guard when the alleged fraud was ultimately exposed.
Despite considerable criticism from crypto investors, including Ripple executives, Gensler has always defended the SEC as the proper “policeman on the beat for cryptocurrency.” Industry participants pushed Gensler to get congressional approval before the SEC regulating crypto goods last year.
Gensler asserted that the SEC has broad power enabling the agency to oversee products related to cryptocurrencies. Recently, the SEC has undertaken tough action against cryptocurrency businesses. BlockFi, a cryptocurrency lending platform, which recently named the SEC as one of its creditors, was fined $100 million by the SEC in February for providing unregistered securities offerings in the United States.
Concerns have been made regarding the SEC’s negligence in relation to FTX’s collapse. Rep. Thomas Earl Emmer of Minnesota said that Gensler was collaborating with SBF to get the cryptocurrency exchange special care from the SEC after FTX failed, citing a meeting the two held in March.
It’s important to note that the SEC joined the CFTC in filing charges against SBF for improper handling of investors’ assets. Rep. Warren Davidson, however, wasn’t persuaded by the allegations made by the agency against the outgoing FTX CEO. He mentioned that the SEC was in charge of SBF’s arrest before the scheduled congressional hearing on December 13.
