In the continuing saga around Sam Bankman-Fried (SBF) and FTX bankruptcy, a top SEC official has stepped down from his post. Dan Berkovitz, General Counsel at the Securities and Exchange Commission (SEC) stepped down after reports surfaced about a controversial dinner with FTX founder SBF.
This news comes after SBF’s arrest and news of a plea.
Berkovitz will be seceeded by Megan Barbero who is currently the SEC Principal Deputy General Counsel. Berkovitz last day at the SEC will be January 31.
Who Is Dan Berkovitz?
Dan Berkovitz is a former regulator and lawyer who has served as the Commodity Futures Trading Commission (CFTC) commissioner and now general counsel of the SEC.
At the CFTC, Berkovitz helped pass the Dodd-Frank Act and served as the commission’s deputy representative to the Financial Stability Oversight Council.
Prior to that, he was counsel to the U.S. Senate Permanent Subcommittee on Investigations where he led major investigations into oil and energy markets. These investigations included speculation of natural gas and oil prices, the Department of Energy’s plan to fill the Strategic Petroleum Reserve (SPR) and allegations of illegal payments by American companies during the UN Oil-for-Food program in Iraq.
He also teaches about energy trading and regulation as an adjunct professor at Georgetown University Law school.
Why is Berkovitz Stepping Down?
In the official statement from the SEC, Berkovitz is stepping down from his position “after thirty-four years of public service, it is time for me to pursue new and different challenges and opportunities.”
However, the announcement came shortly after it was reveled that Berkovitz had met with SBF and FTX lobbyists just days before FTX declared bankruptcy.
Berkovitz was seen as an ally to FTX within the SEC. He had many meetings with SBF and other crypto lobbyists. The Washington Examiner claims that it has emails that suggest that Berkovitz had a warm relationship in particular with SBF.
“If ever there were a scene to conjure up a vision of a D.C. rigged toward corrupt insiders at the expense of the little guy, it would be difficult to top this one. Not long before its collapse and a raft of fraud charges, SBF and his gang were wooing.”
October Meeting of Berkovitz, SBF, and FTX Lobbyists
In October, SBF, FTX General Counsel Ryne Miller, and the then FTX president Brett Harrison met with Berkovitz in a luxury restaurant. This happened while the SEC and CFTC were discussing the best methods for regulating crypto.
The dinner was a great example of SBF’s effort to woo and influence lawmakers and regulators. These efforts by SBF also included being the 2nd largest Democratic donor (and he claims one of the largest Republican donor but those donations where through back doors as there is less acceptance to Republican support in the industry.
Berkovitz had previously criticized decentralized finance for “lacking intermediaries to protect investors,” and called it a “Hobbesian marketplace.”
Despite being considered a decentralized finance hardliner, Berkovitz seems to have been very cozy with SBF.
In the official statement, SEC char Gary Gensler said “I am grateful for Dan’s exceptional public service and his dedication to this agency, Dan has led the Office of General Counsel during a time in which we’ve proposed critical reforms throughout the capital markets. His counsel, judgment, and leadership have been invaluable to our work at the SEC. I have been blessed to work with Dan at two great market regulators, and I congratulate him for his 34 years in public service.”
Update on SBF
SBF was arrested in the Bahamas earlier this month. US prosecutors formally filed criminal charges against SBF and other top FTX/Almeda executives. SBF was extradited to the US on a litany of criminal charges. The Southern District of New York indicted SBF on 8 criminal charges. These charges include wire fraud and conspiracy to misuse customer funds.
The SEC charged SBF with “orchestrating a scheme to defraud equity investors in FTX” in a separate filing. (Read more about the SBF investigation here).
SBF was released last week for a $250 million bail. He is currently under house arrest at the Bankman-Fried family home in Palo Alto and given a $1,000 allowance. Suspiciously, funds in wallets controlled by SBF were moved, seemingly breaking this stipulation, according to on-chain sleuths.