After FTX collapse, Polk US Rep. Soto draws scrutiny for letter questioning SEC inquiries

  • Oops!
    Something went wrong.
    Please try again later.

The collapse of the cryptocurrency exchange FTX has attracted new attention to a letter sent to a federal agency in March and signed by Rep. Darren Soto, D-Kissimmee.

The letter questioned the agency’s use of its enforcement powers to seek information from cryptocurrency and blockchain companies. Soto joined a bipartisan group of eight U.S. House members in signing the letter addressed to the chair of the Securities and Exchange Commission.

A recent report from Reuters, citing an internal FTX document, said the SEC had made informal inquiries earlier this year into how that and other cryptocurrency firms handled customer deposits.

The American Prospect, a progressive magazine, published an article last week criticizing the eight House members and implying that they sought to stymie an investigation into FTX’s inner workings. The magazine labeled those signing the letter “the Blockchain Eight” and likened them to the Keating Five, a group of senators who in 1987 pressured a federal agency into closing an investigation into a California bank that later collapsed.

A progressive magazine has criticized a letter that was sent to the chairman of the Securities and Exchange Commission questioning the agency’s use of its enforcement powers to seek information from cryptocurrency and blockchain companies. U.S. Rep. Darren Soto, D-Kissimmee, was one of the eight signers of the letter.
A progressive magazine has criticized a letter that was sent to the chairman of the Securities and Exchange Commission questioning the agency’s use of its enforcement powers to seek information from cryptocurrency and blockchain companies. U.S. Rep. Darren Soto, D-Kissimmee, was one of the eight signers of the letter.

Ready to open: CITY Furniture to open new Plant City location

Local jobless: Polk County unemployment lower than last year

In a series of tweets, Soto rejected the suggestion that in signing the letter he had sought to shield FTX from federal inquiry.

“The focus of the bipartisan March 16, 2022 letter was on the cryptocurrency industry as a whole,” Soto tweeted on Saturday. “It was approved by Financial Services Committee Oversight legal staff. The letter sought clarity on SEC positions regarding its document request authority for crypto firms in general.”

Soto also tweeted: “The letter was not specific to FTX, didn’t reference FTX, nor did our office have any contact with FTX regarding the letter. The letter did not stop or slow down any investigations into FTX. Rep Soto also has not received any contributions for FTX.”

Soto’s statements came after The Ledger contacted his office seeking comment on the article in The American Prospect. In response, Belen Sassone, a spokesperson for Soto, directed The Ledger to his series of tweets.

Soto, recently re-elected to a fourth term, is co-chair of the Blockchain Caucus, a bipartisan group of U.S. House members. On its webpage, the caucus says it believes in the future of blockchain technology and prefers “a light touch regulatory approach.”

New hospitals: AdventHealth plans hospital in Winter Haven, Lakeland Regional adding emergency unit

In the letter, addressed to SEC Chair Gary Gensler, the eight House members suggested that the SEC was exceeding the authority of its enforcement division in gathering information from unregulated cryptocurrency and blockchain companies. The letter asked the SEC to answer 13 questions about requests the agency had made to such companies over the previous five years.

As The American Prospect reported, one of the letter writers, Rep. Tom Emmer, R-Minnesota, tweeted at the time, saying his office had received numerous tips from cryptocurrency firms that the SEC’s information requests were “overburdensome” and were “stifling innovation.”

A search of Soto’s Twitter feed found no statements from March about the letter.

The American Prospect reported that five of the eight signers of the letter had received campaign contributions from FTX employees, and one — Rep. Ted Budd, R-North Carolina — received half a million dollars from a super PAC created by FTX co-CEO Ryan Salame.

The magazine also noted that the National Republican Congressional Committee, which Emmer headed, received $2.75 million from FTX in the 2022 cycle, plus $2 million from Salame and $750,000 from the company’s PAC.

A search of Soto’s campaign finance reports found no donations from FTX executives.

In his tweets, Soto said that he was one of the first voices in Congress to call for greater regulation of cryptocurrency. He pointed to his role in co-introducing the Digital Taxonomy Act and Token Taxonomy Act in 2018.

“Clarity was needed since there is some debate whether agency jurisdiction over cryptocurrency has been fully established by law,” Soto tweeted. “The letter was well within Congress’ oversight duties.”

Soto also said that he supports a federal investigation into FTX and that the SEC should probe the “theft of consumer money by any industry, including cryptocurrencies.”

Byron Donalds, R-Naples, was the only other House member from Florida who signed the March letter.

Soto’s district encompasses eastern Polk County, including Winter Haven, Haines City and Lake Wales. As a result of this year’s redistricting, in January the district will cover just two small segments of the county in the Poinciana and Solivita areas.

Gary White can be reached at gary.white@theledger.com or 863-802-7518. Follow on Twitter @garywhite13.

This article originally appeared on The Ledger: Polk U.S. Rep. Soto says he did not attempt to shield FTX regulation