Minnesota Rep. Tom Emmer stated that the collapse of FTX and its aftermath was the fault of FTX CEO Bankman-Fried and Securities and Exchange Commission chair Gary Gensler.
“This is not just a failure of FTX. It’s a failure of centralized finance and a failure of Sam Bankman-Fried,” Emmer said.
The FTX collapse is a failure of business ethics
He also pointed to a meeting between Bankman-Fried and Gensler on March 23 as a reason for FTX’s collapse, citing a lack of ethical business practices and government oversight.
“FTX’s collapse is not a crypto failure. It’s a failure with CeFi, @GaryGensler, and Sam Bankman-Fried. Decentralization is the point. Watch below for more thoughts 👇,” he tweeted.
— Tom Emmer (@RepTomEmmer) November 22, 2022
He also said that the SEC was also working with Sam Bankman-Fried and others to give them special treatment that others don’t receive.
His greatest ire was directed at SEC chair Gensler, asking where he was on Voyager and Celsius, Terra Luna, and most recently FTX investigations.
“Sam Bankman-Fried was pushing special treatment legislation through Congress. And when it was finally revealed what it was and the industry started raising red flags, that’s when this thing came apart,” he said.
He emphasized that cryptocurrency or decentralized finance is not the problem.
“This is about centralized finance, which needs to be brought under a regulatory umbrella and Gary Gensler has done nothing to make that happen,” he said.
“Decentralized finance is not what it’s about. It’s not about the crypto industry, this is about Sam Bankman-Fried and regulators,” he added.
The collapse was inevitable
On the other hand, a blockchain data firm, Glassnode, stated in its latest report that FTX’s digital asset reserve dropped dramatically following Terra’s ignominious crash in May.
Glassnode observed an increasing pool of on-chain data that suggests cracks have existed as late as May-June, which is when FTX’s Bitcoin reserves plummeted.
“This would leave recent months as being simply a precursor to what was more than likely an inevitable collapse of the exchange,” Glassnode said.
The firm further explained, “As claims of Alameda misappropriating customer deposits come to light, this indicates that the Alameda-FTX entity may have in fact experienced severe balance sheet impairment in May-June following the collapse of LUNA, 3AC, and other lenders.”