SEC Under Fire for Oversight Failures on FTX’s Financial Practices

The Securities and Exchange Commission (SEC) was “asleep at the wheel” regarding how FTX Group and its subsidiaries met financial and corporate control requirements, Representative Pete Sessions reported in the Saturday Report on December 17.

“We need to look at what the Securities and Exchange Commission was doing,” stated the Texas Congressman, adding that “the SEC was asleep at the wheel for these billions of dollars that we now find out about a year later.”

The SEC filed charges against Sam Bankman-Fried (SBF), the former CEO of FTX, on Dec. 13, claiming that he violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In the complaint, the SEC requests an injunction to prohibit Bankman-Fried from participating in the issuance, purchase, offer or sale of any securities except for his own account.

Related: Democrats to reportedly return over $1M of SBF’s funding to FTX victims

SEC Chair Gary Gensler said Bankman-Fried “built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.” The charges came just a day after his arrest by Bahamian authorities at the request of the United States.

Sessions also pointed out that a year ago, Bankman-Fried testified at a congressional committee hearing, where he was asked about the need for regulatory oversight of cryptocurrencies. Bankman-Fried claimed, “it’s just a matter of transparency,” according to Sessions.

Furthermore, Sessions mentioned that Bankman-Fried had “full access to members of Congress and the U.S. Senate.”

These comments come in the wake of criticism from Senator Tom Emmer, who has also laid blame on Gensler for his flawed “crypto information-gathering efforts,” calling for him to appear before Congress to explain “regulatory failures.”

Emmer noted that Gensler hasn’t appeared before the House Committee on Financial Services since October 2021, effectively leaving the gap for crypto media to fill regarding the SEC’s failures in investigating crypto concerns.