Are the SEC and The Federal Reserve Part of the Story of Bankrupt FTX? Derivatives Become an Issue
/By Stan Szymanski
At this point, most people who follow the cryptocurrency as well as the equity and bond markets are aware of the awful mess at FTX Group and its ‘sister’ company, Alameda Research. Both of these companies were founded by Sam Bankman-Fried. I reported this when the news broke-you can read about it here.
In a nutshell:
…’Crypto exchange FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter said. … FTX Chief Executive Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said.‘…(Wall Street Journal online)
Today, FTX group has filed for Chapter 11 bankruptcy and its founder, Sam Bankman-Fried (SBM), has stepped down as CEO. A new CEO has been appointed to maximize stakeholder recovery.
On the surface, those two facts would seem to be the big news of the day for the crypto token and company that has fallen from lofty monetary heights. But in reality, it is far from the being the biggest news of this 24 hour period when it comes to FTX.
The biggest news IMHO that has come to light this week regarding the FTX saga has not been reported by the standard mainstream financial talking heads of Bloomberg, The Wall Street Journal or Barron’s. It comes from a man who has made a name for himself when it comes to cryptocurrencies as well as precious metals: Bix Weir.
Mr. Weir runs the ‘RoadToRoota’ website where he has reported daily for over a decade the goings on in the precious metals and cryptocurrency market. Bix is well known for his reporting on the ‘Silver Slamdown’ of Black Sunday (2011) in the silver market. The ‘Road To Roota’ theory as he defines it: …’"The Road to Roota Theory postulates that there is a group of people in the United States as well as around the world that are working to remove and destroy the financial banking powers that have secretly controlled all aspects of our lives for hundreds of years."
His revelations yesterday were extraordinary.
…’Wow! It looks like there is an MIT Crypto Mafia run by the SEC's Gary Gensler that includes his old boss at MIT Glenn Ellison as well as his daughter Caroline Ellison...the current CEO of Alameda Research of FTX fame! Will Gensler throw the daughter of his old boss in JAIL or was Gensler himself involved in a DeFi Ponzi SET-UP to crash the cryptos and implement massive REGULATIONS?! This shit stinks!’…(via the RoadToRoota YouTube channel 11/10/22)
Gary Gensler is the current chair of The Securities and Exchange Commission. He was sworn into that office in April 17, 2021. Before that however, he was (and apparently still is) a professor at MIT who taught ‘blockchain technology, digital currencies, financial technology, and public policy’.
According to Mr. Weir, Genslers’ boss at MIT was Glenn Ellison. Ellisons’ daughter Caroline, was named co-CEO on Oct. 12, 2021 of Alameda Research before being named sole CEO in late August of 2022. According to Coin98…’In 2021, Alameda Research was one of the most influential venture capitals in crypto. They participate in investing in crypto projects and trading, OTC, and market-making.’…
Given this information, it would be naive to think that the three letter agency that he heads was uninformed as to what was transpiring at FTX and Alameda. What Weir is questioning seriously is the possibility of Gensler being enmeshed in a Ponzi scheme with FTX/Alameda to bring cryptocurrencies down, assumedly to make the US monetary authorities and offerings (like a new central bank digital currency) look good by comparison.
Bix also opined if Gensler would throw Caroline Ellison in the pokey. When is the last time you saw someone who committed horrendous banking crimes like the banks that wrote and approved mortgages for people with no job, no income and no assets like what happened in 2007-2008 as depicted in the movie The Big Short? Did you hear crickets? Me too. So that makes the former assumption above by Mr. Weir a bit more plausible.
Of course we need to ask: Where did all the money from these loans go to? Orphans’ homes? Or to connected people? Only time will tell.
A second related item I wanted to share with you was a calendar entry earlier this year of the ‘esteemed’ Chair of The Federal Reserve, Jerome Powell.
I must thank a premium member of Zero Hedge for pointing the following out:
From 1:00-2:00pm on February 1, 2022 Chairman Jerome Powell was scheduled to meet with: Sam Bankman-Fried, CEO and Founder, Brett Harrison, President, Ryne Miller, General Counsel, and Mark Wetgen, Head of Policy and Regulatory Strategy, FTX US and Zach Dexter, CEO, FTX US Derivatives. (Full document can be seen at https://www.federalreserve.gov/foia/files/chair-powell-calendar-022022.pdf)
(Blue highlight added for emphasis)
So, ladies and gentlemen in early 2022 the Chair of the Federal Reserve met with the leadership of the U.S. arm of FTX-including the CEO of FTX US Derivatives.
For what purpose?
If you care to look at the ‘FOIA’ link above, you will see, at least on that day, the chairman held most of his meetings in a ‘virtual’ manner. Why would the Fed Chair have to have an ‘in person’ meeting with FTX?
Does it have anything to do with what happened during the last week in the crypto market and more specifically FTX/Alameda Research? What about the derivatives?
…’Crypto broker Genesis said its derivatives business has about $175 million “in locked funds” in the company’s FTX trading account.
“This does not impact our market-making activities,” the firm said in a Twitter thread, adding “our operating capital and net positions in FTX are not material to our business.”…Broker Genesis’ Derivatives Unit Has About $175 Million on FTX Platform (6:20 p.m.) (Yahoo Finance)
It is quite possible that we have yet to see the full effect of derivative exposure to the FTX problem. In a second nutshell, if the derivatives implode the entire system does as well. Goodbye pension, goodbye 401(k), goodbye savings in the bank.
Again, perhaps only time will tell. But if we are lucky, perhaps someone on the inside will tell.
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Stan Szymanski (or Encouraging Angels) is not a medical doctor. This is not medical advice. In all matters pertaining to the health and care of a human being consult a medical doctor. This is not legal, financial or personal advice. Consult appropriate professionals in those fields for that type of advice.