SEC Chair Gensler says rebooted FTX run by ex-NYSE chief is possible if done ‘within the law’
SEC Chair Gary Gensler mocks putting a gun to his head in response to a “Blazing Saddles” reference by Rep. Emanuel Cleaver, D-Mo., during the House Financial Services Committee hearing titled “Oversight of the Securities and Exchange Commission,” in Rayburn Building on Tuesday, April 18, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
WASHINGTON — A revived FTX could work if new leadership does so with a clear understanding of the law, SEC chair Gary Gensler told CNBC on the sidelines of DC Fintech Week.
Gensler was referring to reports that Tom Farley, a former president of the New York Stock Exchange, is among a short list of three bidders vying to buy what remains of the bankrupt crypto exchange. Farley launched his own digital asset exchange in May called Bullish, which is reportedly one of the final contenders in the bankruptcy auction.
“If Tom or anybody else wanted to be in this field, I would say, ‘Do it within the law,'” Gensler said on Wednesday. “Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures — and also that you’re not commingling all these functions, trading against your customers. Or using their crypto assets for your own purposes.”
FTX founder Sam Bankman-Fried was found guilty last week on all seven criminal counts against him, including fraud and money laundering charges. His exchange, which filed for bankruptcy a year ago, was funneling customer money to sister hedge fund Alameda Research, according to the charges.
Alameda was a market maker for the FTX exchange, and was given privileges, such as a $65 billion line of credit requiring no collateral. Unlike other customers on the platform, Alameda was also granted the unique ability to go negative in its trading bets, without having its positions liquidated.
“We would never let the New York Stock Exchange also operate a hedge fund and trade against their members or trade against customers in the market,” said Gensler.
FTX and Alameda were supposed to be separated by a firewall. But the evidence presented in the monthlong trial made clear how cozy they were in practice.
“FTX and Alameda had an extremely problematic relationship,” Castle Island Venture’s Nic Carter told CNBC. “Bankman-Fried operated both an exchange and a prop shop, which is super unorthodox and just not really allowed in actually regulated capital markets.”
Sam Bankman-Fried stands as forewoman reads the verdict to the court.
Artist: Elizabeth Williams
Separate to the criminal charges, the SEC and the Commodity Futures Trading Commission brought civil suits against FTX. The SEC in December accused Bankman-Fried of running nothing less than a “brazen,” yearslong fraud “from the start.”
Gensler said that, when it comes to considering new rules regulating the industry, existing securities laws are “very robust and strong.” They just need to be enforced.
“There’s nothing about crypto that’s incompatible with securities laws,” he said. “You’ve got just a lot of worldwide actors that are currently not complying with these time-tested laws.”
FTX was based in the Bahamas and used mostly by customers outside the U.S., though it had a small American affiliate. Crypto exchange Binance is under fire from U.S. regulators even though it operates an international business. The SEC and CFTC have both brought charges against Binance, alleging the company and founder Changpeng Zhao have worked to subvert “their own controls” to let high-net-worth U.S. investors and customers continue trading on its unregulated international exchange.
“Think about how many actors in this space are not complying right now with international sanctions and money laundering laws and are using crypto for nefarious or bad actions,” Gensler said, without naming companies or individuals.
The SEC has recently suffered a few interim losses in the courts, including to Ripple over the $1.3 billion the company raised in what the SEC called an unregistered securities offering, as well as to Grayscale, related to the firm’s application to convert its bitcoin trust into a spot bitcoin exchange-traded fund.
Gensler said that over the last six years, the SEC has either brought or settled 150 cases in crypto. One of its legal spats is with Coinbase, a publicly traded crypto exchange in the U.S. that’s threatening to leave the country over regulatory constraints.
Gensler said companies here have to obey the law, though he avoided references to specific cases.
“If it’s a non-compliant fraudster, why would we want them in our markets?” he said.
GreenPower Motor Company says it’s received three orders for 11 of its BEAST electric Type D school buses for western state school districts in Arizona, California, and Oregon.
GreenPower hasn’t made the sort of headline-grabbing promises or big-money commitments that companies like Nikola and Lion Electric have, but while those companies are floundering GPM seems to be plugging away, taking orders where it can and actually delivering buses to schools. Late last year, the company scored 11 more orders for its flagship BEAST electric school bus.
As far as these latest orders go, the breakdown is:
- seven to Los Banos Unified School District in Los Banos, California
- two for the Hood River County School District in Hood River, Oregon
- two for the Casa Grande Elementary School District in Casa Grande, Arizona
Those two BEAST electric school buses for Arizona will join another 90-passenger BEAST that was delivered to Phoenix Elementary School District #1, which operates 15 schools in the center of Phoenix, late last year.
“As school districts continue to make the change from NOx emitting diesel school buses to a cleaner, healthier means of transporting students, school district transportation departments are pursuing the gold standard of the industry – the GreenPower all-electric, purpose-built (BEAST) school buses,” said Paul Start, GreenPower’s Vice President of Sales, School Bus Group. “(The) GreenPower school bus order pipeline and production schedule are both at record levels with sales projections for (2025) set to eclipse the 2024 calendar year.”
GreenPower moved into an 80,000-square-foot production facility in South Charleston, West Virigina in August 2022, and delivered its first buses to that state the following year.
Electrek’s Take
Since the first horseless carriage companies started operating 100 years ago (give or take), at least 1,900 different companies have been formed in the US, producing over 3,000 brands of American automobiles. By the mid 1980s, that had distilled down to “the big 3.”
All of which is to say: don’t let the recent round of bankruptcies fool you – startups in the car and truck industry is business as usual, but some of these companies will stick around. If you’re wondering which ones, look to the ones that are making units, not promises.
SOURCE | IMAGES: GreenPower Motors.
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While some recent high-profile bankruptcies have cast doubt on the EV startup space recently, medium-duty electric truck maker Harbinger got a shot of credibility this week with a massive $100 million Series B funding round co-led by Capricorn’s Technology Impact Fund.
It’s been a rough couple of weeks for fledgling EV brands like Lion Electric and Canoo, but box van builder Harbinger is bucking the trend, fueling its latest funding round with an order book of 4,690 vehicles that’s valued at nearly $500 million. Some of the company’s more notable customers including Bimbo Bakeries (which owns brands like Sara Lee, Thomas’, and Entenmann’s) and THOR Industries (Airstream, Jayco, Thor), which is also one of the investors in the Series B.
Other prominent investors include Tiger Global, the Coca-Cola System Sustainability Fund, and ArcTern Ventures.
As for what makes Harbinger such an attractive investment prospect, Dipender Saluja, Managing Partner of Capricorn Investment Group’s Technology Impact Fund explains that, “Harbinger has demonstrated a remarkable ability to reach significant milestones far quicker than other EV companies … the market has been impressed by their ability to develop large portions of the vehicle in-house to drive down unit costs, while remaining capital efficient.”
The company plans to use the funds to ramp up to higher-volume production capacity and deliver on existing orders, as well as build-out of the company’s sales, customer support, and service operations.
“Harbinger is entering a rapid growth phase where we are focused on scaling production of our customer-ready platform,” said John Harris, co-founder and CEO. “These funds catalyze significant revenue generation. We’ve developed a vehicle for a segment that is ripe for electrification, and there is a strong product/market fit that will help fuel our upward trajectory through 2025 and beyond.”
The company has raised $200 million since its inception in 2021.
SOURCE | IMAGES: Harbinger.
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There is no state more associated with cars and car culture than Michigan – and the state that’s home to the Motor City has just taken a huge step into the future with the deployment of its first-ever all electric police vehicle.
The 2024 Ford Mustang Mach-E patrol vehicle is assigned to the Michigan State Police State Security Operations Section, and will be to be used by armed, uniformed members of the MSP specializing in general law enforcement and security services at state-owned facilities in the Lansing, MI area.
“This is an exciting opportunity for us to research, in real time, how a battery electric vehicle performs on patrol,” says Col. James F. Grady II, director of the MSP. “Our state properties security officers patrol a substantially smaller number of miles per day than our troopers and motor carrier officers, within city limits and at lower speeds, coupled with the availability of charging infrastructure in downtown Lansing, making this the ideal environment to test the capabilities of a police-package battery electric vehicle.”
The MSP’s Precision Driving Unit is nationally renowned for its annual Police Vehicle Evaluation, which our own Scooter Doll participated in last year, driving the then-new Chevy Blazer EV Police Pursuit Vehicles in a game of “cops and robbers.”
In those tests, the EVs have impressed – but the MSP has been hesitant to commit to a BEV until now. “We began testing battery electric vehicles in 2022, but up until now hybrids were the only alternative fuel vehicle in our fleet,” said Lt. Nicholas Darlington, commander of the Precision Driving Unit. “Adding this battery electric vehicle to our patrol fleet will allow us to study the vehicle’s performance long-term to determine if there is a potential for cost savings and broader applicability within our fleet.”
Michigan joins other states like Wisconsin and California in deploying electric patrol cars and saving big money on fuel and maintenance, with many more out there and many more to come.
SOURCE | IMAGES: Michigan State Police.
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