A major exchange executive said he spotted the warning signs of danger months before the historic crash of FTX.
CME Group President and CEO Terry Duffy said he suspects corruption at the crypto exchange on the day of his first face-to-face meeting with founder Sam Bankman-Fried.
“I told my team that this has nothing to do with crypto,” Duffy told CNBC.fast money” on Tuesday. “He wants to list all the asset classes, mine, Intercontinental, CME and everyone else’s, according to his model, this would be … a disaster in the Bible.”
Bankman-Fried’s team did not immediately respond to a request for comment.
Duffy first recounted his meeting with Bankman-Fried last week on the “On the Tape” podcast, hosted by “Fast Money” traders Guy Adami and Dan Nathan.
“You’re a fraud. You’re a total fraud,” Duffy told Bankman-Fried.
Now, Duffy is providing more details about what happened leading up to his encounter with him.
Duffy wants to know why the Commodity Futures Trading Commission is considering Bankman-Fried’s request to relax regulatory rules to boost his trading model. He was told it was required under the renewal guidelines.
“I immediately became suspicious,” Duffy said. “Why is there so much pressure on this app? And when I met him, I knew right away this was a joke.”
However, Duffy said he is not surprised that FTX attracts so many well-known investors and sponsors.
“When you have the greatest quarterback of all time and a supermodel wife is advertising picking up the phone saying ‘Are you in, are you in.’ To me, it was like a pump-and-dump scheme,” Duffy said. “People are influenced by people like Tom [Brady].”
The crash of FTX was the largest crypto exchange bankruptcy on record. Now is the early days of a bankruptcy hearing in Delaware. On Monday, FTX attorney James Bromley, hired by FTX’s new management, said “What we’re dealing with is a different kind of animal.”
Duffy added: “There will be a lot of hearings going on in the future. Keep an eye on the money. Let’s see who knows what, when and where.”
The Senate Agriculture Committee plans to hold a hearing on the FTX blast on December 1.
“I hope someone has the courage to ask, ‘Is anyone putting pressure on the CFTC to go ahead with an app that could put things at risk?'” Duffy said.
Disclosure: CME Group is the presenting sponsor of the “On The Tape” podcast.
