Commodity Futures Trading Commission Chairman Rostin Behnam testifies during a U.S. Senate Agriculture, Nutrition and Forestry Committee hearing on the collapse of cryptocurrency exchange FTX, one of the world’s biggest crypto exchanges, on Capitol Hill in Washington, December 1, 2022.
- CFTC Chair Rostin Behnam testified before the Senate Committee on Agriculture, Nutrition, and Forestry that Sam Bankman-Fried, former CEO of bankrupt cryptocurrency exchange FTX, met with agency officials more than 10 times over the past 14 months.
- Behnam told the committee that FTX 'doggedly' pursued an amendment to the CFTC-registered entity LedgerX.
- LedgerX is one of the sole FTX entities not to file for bankruptcy, according to Behnam.
WASHINGTON — The founder and former CEO of failed cryptocurrency exchange Sam Bankman-Fried met with high-level officials at the Commodity Futures Trading Commission more 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.
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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 time 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 in 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 of the few FTX entities that didn't file for bankruptcy along with FTX last month.
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Bankman-Fried stepped down as FTX CEO and the company filed for Chapter 11 bankruptcy last month.
"The CFTC has been in near-daily contact with LedgerX as well as the third-party custodians it uses to hold cash and digital assets," Behnam said. "Based on the information presented to us, at this time, LedgerX customer property remains secure and LedgerX has the financial resources to continue 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 meeting at a conference in Florida, two phone calls and a number of messages aimed at moving the application along.
Later in the hearing, Behnam told Sen. Tommy Tuberville, R-Ala., that emails were also exchanged between the parties.
"Some of the messages were about scheduling the 10 meetings I mentioned," Behnam said. "But it was about updates, giving us, again, this dogged approach to 'we submitted answers to the questions from the division or we have more data to just support their advocacy of this application,' all in relation to the application."
The CFTC chair said he didn't know how many times Bankman-Fried or FTX executives met with other staff at the agency, but he said they were in the building "quite a bit" to discuss the details of the clearinghouse application.
"I made a decision very early to be as transparent as possible with the process," Behnam said. "There were very, very strong feelings about this application. And I felt I needed to be engaged as the chairman of the agency that met directly with FTX and Mr. Bankman-Fried."
The commission was reviewing FTX's application at the time it filed for bankruptcy. Behnam said there had been no decision as of Nov. 11, when FTX announced its bankruptcy.
