Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), during a Senate Agriculture, Nutrition and Forestry Committee hearing in Washington, D.C., U.S., on Wednesday, Feb. 9, 2022.
Sarah Silbiger | Bloomberg | Getty Images
WASHINGTON — The founder and former CEO of failed cryptocurrency exchange Sam Bankman-Fried met with high-level officials on the Commodity Futures Trading Commission greater than 10 times over the past 14 months, including with CFTC Chairman Rostin Behnam.
Behnam testified Thursday before the Senate Committee on Agriculture, Nutrition, and Forestry, which oversees the nation’s commodities markets. The CFTC head told senators that the meetings with Bankman-Fried centered around FTX’s “dogged” desire to amend the clearinghouse license for LedgerX LLC, which FTX bought in 2021 and is overseen by the CFTC.
The amendment, which was filed about 12 months ago, would have allowed LedgerX to directly settle crypto derivatives without the involvement of intermediaries. The proposed change was still pending approval by the point FTX filed for bankruptcy earlier this month.
“My team and I met with Mr. Bankman-Fried and his team. Over the past 14 months, we met 10 times within the CFTC office at their request all in relation to this (derivatives clearing organization); this clearinghouse application,” Behnam told committee chair Sen. Debbie Stabenow, D-Mich.
In his opening statements, Behnam said LedgerX has been registered with the CFTC since 2017 and was one in every of the few FTX entities that did not file for bankruptcy together with FTX last month.
Bankman-Fried stepped down as FTX CEO and the corporate filed for Chapter 11 bankruptcy last month.
“The CFTC has been in near-daily contact with LedgerX in addition to the third-party custodians it uses to carry money and digital assets,” Behnam said. “Based on the data presented to us, presently, LedgerX customer property stays secure and LedgerX has the financial resources to proceed operating for the foreseeable future.”
Behnam said most of his meetings with Bankman-Fried and the FTX team took place in Washington, but there was also a gathering at a conference in Florida, two phone calls and numerous messages geared toward moving the applying along.
Later within the hearing, Behnam told Sen. Tommy Tuberville, R-Ala., that emails were also exchanged between the parties.
“A few of the messages were about scheduling the ten meetings I discussed,” Behnam said. “However it was about updates, giving us, again, this dogged approach to ‘we submitted answers to the questions from the division or we’ve got more data to simply support their advocacy of this application,’ all in relation to the applying.”
The CFTC chair said he didn’t know the way repeatedly Bankman-Fried or FTX executives met with other staff on the agency, but he said they were within the constructing “quite a bit” to debate the small print of the clearinghouse application.
“I made a choice very early to be as transparent as possible with the method,” Behnam said. “There have been very, very strong feelings about this application. And I felt I needed to be engaged because the chairman of the agency that met directly with FTX and Mr. Bankman-Fried.”
The commission was reviewing FTX’s application on the time it filed for bankruptcy. Behnam said there had been no decision as of Nov. 11, when FTX announced its bankruptcy.
