Bankman-Fried on regulators: They make everything worse

An article released on Wednesday revealed how Sam Bankman-Fried really felt about regulators: “F*** regulators.”

The author of the article, Kelsey Piper, to his surprise, got to chatting with the former chief executive officer of cryptocurrency exchange FTX who, though now under heavy scrutiny by many US federal and local government agencies, answered her questions directly.

She posted screen shots of her and Bankman-Fried’s Twitter conversation in her article, revealing that how the former crypto billionaire might truly feel about the regulators and regulations he once said were good for the industry and for his company.

“Before his empire collapsed, Bankman-Fried was actively lobbying in Washington, DC for a regulatory framework for cryptocurrency,” Piper said in her article.

“While many crypto CEOs — like Bankman-Fried’s nemesis, Binance Chief Executive Officer Changpeng ‘CZ’ Zhao — are openly skeptical of government regulation, Bankman-Fried has largely avoided criticizing regulators.

“But in our conversation, he dismissed their role. He characterized his past conciliatory statements — like when he said just last month that some amount of crypto regulation would be ‘definitively good’ — as little more than ‘PR’ (public relations).

“In doing so, he all but confirmed the view of critics who have argued that his overtures to Washington were much more about image than substance.”

Piper then posted a  series of screenshots of the conversation, where Bankman-Fried seems overtly anti-regulation.

“There’s no one really out there making sure good things happen and bad things don’t,” Bankman-Fried says in the screenshot conversation.

He added: “F*** regulators. They make everything worse. They don’t protect consumers at all.”

During the groundbreaking ceremony for his headquarters in April, Bankman-Fried said his company chose The Bahamas from a laundry list of countries because of its digital assets legislation, known as the Digital Assets and Registered Exchanges (DARE) Act.

Bankman-Fried said FTX searched the globe with a fine-tooth comb to find a well-regulated jurisdiction to set up shop.

“We sort of went country by country and crossed off the ones that required a license but could not grant one,” said Bankman-Fried.

“We weren’t sure where we’d end up… we sort of got word that one of them (countries) actually had already passed a cryptocurrency regulation regime, one of the only jurisdictions in the world to do so, and the few emissaries we had sent out to check it out had a really, really good experience. That was The Bahamas.

“Halfway through the process of trying to figure out where we would be, The Bahamas sort of jumped all the way to the front.”

Bankman-Fried said the work that had been done by the SCB and the Bahamas government went a long way in helping FTX make the decision to move its company to this country.

Bankman-Fried tweeted two days ago that he is impressed by certain regulators and included the Securities Commission of The Bahamas in his thoughts.

He said though that “most are overwhelmed”.

Bankman-Fried continued: “Which means that interacting with regulatory structures can be really frustrating: a ‘huge’ amount of work… much of it arbitrary… and relatively little customer protection.” 

On the heels of his thoughts about regulations came a declaration from new FTX Chief Executive Officer John J. Ray supporting the Chapter 11 bankruptcy filing by Bankman-Fried before he resigned as FTX chief executive officer.

Ray explained in his declaration that many of the companies in the FTX Group, especially those in Antigua and The Bahamas, did not have appropriate corporate governance.

“I understand that many entities, for example, never had board meetings,” he added.

He also outlined in the declaration that the “FTX Group did not maintain centralized control of its cash”.

“Cash management procedural failures included the absence of an accurate list of bank accounts and account signatories, as well as insufficient attention to the creditworthiness of banking partners around the world,” said Ray.

He also explained in the filing that FTX did not have appropriate disbursement controls, but simply submitted disbursement requests into an online chat where a “disparate group of supervisors approved disbursements by responding with personalized emojis”.

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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