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Ellison testimony reveals FTX plan for a regulatory "crack down" on Binance

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Sunday, November 24, 2024

Ellison testimony reveals FTX plan for a regulatory "crack down" on Binance

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Caroline Ellison (left) and Sam Bankman-Fried (right) | Ellison: twitter.com/carolinecapital. Bankman-Fried: MIT Bitcoin Club, Creative Commons License 3.0.

Former Alameda Research CEO Caroline Ellison testified in court that FTX founder and former CEO Sam Bankman-Fried sought a regulatory "crack down" on crypto exchange Binance. Ellison revealed this information during Bankman-Fried's fraud trial, where he is accused of perpetrating a massive financial fraud that left FTX investors and creditors missing billions of dollars.

According to Reuters, Ellison testified on Oct. 11 that Bankman-Fried suggested that FTX could increase its market share by pushing for regulatory pressure on Binance. Bankman-Fried allegedly assured Ellison that regulators had promised him that such pressure was incoming. The Securities and Exchange Commission (SEC) filed a lawsuit against Binance in June 2023.

Before its collapse, FTX was the second largest crypto exchange in the world, following Binance, according to Watcher Guru. 

There have been questions raised about Bankman-Fried's access to U.S. regulators, including SEC Chair Gary Gensler, as reported by Intelligencer. Gensler reportedly met with Bankman-Fried and other FTX executives in late 2021, and the two had a private meeting in March 2022. During this time, Bankman-Fried was testifying before Congress about regulating the crypto market and lobbying for a bill that would benefit FTX. Bankman-Fried also reportedly had dinner with the SEC's incoming general counsel, Dan Berkovitz, who later stepped down from his position.

An analyst from bitcoin.com expressed concerns about potential "double standards" and the influence of "connections and money" in legal proceedings, citing Bankman-Fried's close ties with the SEC and his substantial political donations to prominent public figures.

Additionally, Gensler has faced scrutiny for his meeting with Bankman-Fried, as the New York Post reported that he did not obtain the necessary permission to hold the meeting.

Bankman-Fried's trial began earlier this month and is expected to last up to six weeks, according to Reuters. Federal prosecutors have described his actions at FTX as "one of the biggest financial frauds in American history," accusing him of defrauding investors to enrich himself.

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