Don’t want the SEC investigating you? Better make some friends in Congress then. In the latest chapter in the FTX saga, it turns out that US Congress members who received sizeable donations from the now-defunct crypto exchange attempted to stop an investigation by the Securities and Exchange Commission (SEC) into said exchange.
In a letter dated 16 March 2022, eight members of Congress questioned the SEC’s authority to make inquiries into crypto companies.
Some 13 questions were posed to the SEC regarding whether the body was violating federal law by proceeding with its inquiries.
“Your response will help provide us with a better understanding of the SEC’s authority to secure the information and transparency it feels it requires while also ensuring these types of requests are not overburdensome, unnecessary, and do not stifle innovation,” the letter stated.
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The letter in question was signed by four Democrats and four Republicans who have been nicknamed the Blockchain Eight: Tom Emmer, Darren Soto, Warren Davidson, Jake Auchincloss, Bryon Donalds, Josh Gettheimer, Ted Budd and Ritchie Torres.
The Blockchain Association had applauded the letter in March, describing Emmer as a “champion” who was “making America a crypto innovaiton leader.” Ron Hammond, the association’s director, was one of the letter’s signatories.
Emmer, who led the letter wrote on Twitter, “my office has received numerous tips from crypto and blockchain firms that SEC Chair @GaryGensler’s information reporting ‘requests’ to the crypto community are overburdensome, don’t feel particularly … voluntary … and are stifling innovation.”
Five of the eight members received campaign donations from FTX employees ranging from US$2,900 to US$11,600. Budd received around US$500,000 in support from a so-called super PAC (political action committee) created by FTX co-CEO Ryan Salame.
Emmer served as the National Republican Congressional Committee (NRCC) – the campaign arm for the House of Republicans. The NRCC’s associated super PAC, the Congressional Leadership Fund received US$2.75 million from FTX in 2022, US$2 million from Salame and US$750,000 from the company’s political action committee.
Gottheimer and Emmer both received US$11,600 each with FTX being in the top 15 of Emmer’s biggest donors in 2022. Auchincloss received US$6,800, whilst Budd and Torres received US$2,900. Gottheimer and Emmer also received US$2,900 each from Coinbase whilst Auchincloss received US$2,000.
In a Twitter thread, Emmer said, “crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements. We will ensure our regulators do not kill American innovation and opportunities.”
FTX had been seen as a Democrat-pro firm but the money raised for the Republicans helped them win the majority in 2022. Around 50% of funds went to the GOP whilst just under 50% went to the Democrats. Salame gave US$23.6 million to Republican candidates but SBF gave US$40 million to the Democrats.
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After FTX collapsed, Emmer has been singing a different tune. On Twitter, Emmer said Gensler and FTX were “work[ing] on legal loopholes to obtain a regulatory monopoly”, suggesting that Gensler had ties to the firm. Emmer had claimed the SEC was illegally investigating crypto firms in March but is now critiquing them for not investigating properly.
None of the Blockchain Eight have stated where the donations went.