Sam Bankman-Fried (SBF), who is thought to be the mastermind behind one of the biggest fraud cases in U.S. history, was going to be questioned by Congress at a hearing this week. He was arrested at his home in the Bahamas just hours before that date, so the hearing did not happen.
Even though there were signs before the hearing that SBF wouldn’t show up in person, he agreed to a video link. This makes you wonder why the government acted the way it did.
Warren Davidson, a Republican from Ohio who is also on the Financial Services Committee (FSC), can only think of one reason. Regulators wanted the person to be arrested so that the hearing would not happen.
Related: Records show that 7 class action lawsuits have thus far been brought against SBF.
The fact that SBF is close to Gary Gensler, the head of the SEC, has come up many times in the past. There have also been a number of meetings that were caught on tape.
This was so obvious that Ripple brought it up in the lawsuit the SEC filed against the company. Why did SBF go in and out of the SEC while other big crypto players couldn’t get in?
Did relationships with people matter? For example, Gary Gansler was a professor at MIT when Glenn Ellison was in charge of the Institute of Economics at MIT. Caroline Ellison’s father is Glenn Ellison. Caroline Ellison was CEO of a branch of FTX called Alameda Research and had a short-term relationship with SBF.
Dailymail wrote about a 45-minute zoom video of SBF talking to Gary Gensler about starting a new crypto exchange. This gives the impression that the SEC chairman was SBF’s personal advisor.
All of this may have led the government to arrest SBF before Congress could ask questions. Warren Davidson is sure of this because Gensler would not have been able to control the questions Congress asked and therefore would not have been able to predict what SBF would testify about. Davidson told us:
“My best guess is that the SEC and other regulators didn’t want SBF to say what he thought about the question, “So what were you doing with Gary Gensler in the Securities and Exchange Commission with all these meetings and interactions you’ve had with regulators?”
“He would have said what he thought about the issue. The questions could not have been filtered by regulators like the SEC, Gensler, and others. They had no idea where it was going. I think that was part of what made the arrest happen when it did.”
Related: After problems at FTX, SBF falls off of Bloomberg’s list of billionaires.
Attorney John Deaton said this was “a very interesting point of view from a sitting member of Congress who sits on the FSC.”
