Former FTX CEO Sam Bankman-Fried met with Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg a few months before the exchange’s collapse.
Emails obtained by watchdog group Protect the Public’s Trust sent to The Washington Examiner suggest that the meeting took place around the week of June 13, 2022, after being set up by Mark Wetjen, a former CFTC Commissioner who was heading FTX US’ policy and regulatory strategy at the time.
“Sam and I have worked in traditional market structures, and I strongly believe the FTX model is all things considered a superior model,” wrote Wetjen in an email to Gruenberg.
Wetjen went on to explain that crypto exchanges like FTX are the “gatekeepers” for the ecosystem because they facilitate trading and redemptions of stablecoins. He stressed that the correct regulatory conditions for risky stablecoins would lead to better controls.
“We are in the unusual position of begging the federal government to regulate us. We have an application before the CFTC that lays out for the agency how to do so. All the CFTC has to do is approve it. Once the CFTC does, the others will follow — the other major US exchanges also have CFTC licenses,” he added.
Wetjen was referring to FTX’s application before the CFTC to allow its derivatives exchange to operate as a clearing house and offer margined futures products for Bitcoin and Ethereum.
A spokesperson for the FDIC confirmed to The Washington Examiner that a single meeting between Gruenberg, Bankman-Fried and Wetjen had taken place, suggesting it was more of a “routine courtesy visit” that FDIC Chairmen have with leaders of financial firms.
However, Michael Chamberlain, director of the watchdog group that obtained the emails, believes that the FTX executives were looking to influence crypto regulations to their advantage. In his view, Gruenberg’s swift response to the meeting request is indicative that FTX held major sway among regulators before it came under scrutiny.
Some market participants now believe that the FDIC has taken an anti-crypto stance and may be working to block crypto firms’ access to the banking system. Although the FDIC denied asking potential buyers of Signature Bank to give up its crypto business, the bank’s crypto deposits were not included in its sale to Flagstar Bank.
“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business,” stated the FDIC regarding the $4 billion worth of crypto deposits held at Signature.