LedgerX Claims Former CFTC Chairman Obstructed Approvals For Personal Reasons

The crypto derivatives organization LedgerX has made some headlines recently. Specifically, the company is claiming that the former chairman of the United States Commodity Futures Trading Commission – CFTC – hindered approvals.

Did the ex-CFTC chairman willingly obstruct LedgerX’s approval efforts?

This story was first covered by Coindesk on September 28th. At the time, LedgerX reportedly sent two letters with pertinent allegations. Moreover, the firm believes that the former chairman of the CFTC, Christopher Giancarlo, may have obstructed approval of the firm’s amended Derivatives Clearing Organization registration.

Furthermore, these letters suggest that Giancarlo may have sought to prolong the approval process due to personal bias against LedgerX’s CEO, Paul Chou. This first LedgerX letter also hints that this animosity may stem from one of Chou’s blog posts:

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”We have strong reason to believe that this unreasonable delay that is in clear violation of the Commodity Exchange Act is related to the Chairman’s animus towards a blog post written by our CEO.”

The Coindesk report also says that Giancarlo has refused to answer calls for comments on the matter. Nevertheless, Chou is said to have already verified that the letters are, indeed, accurate, real, and ”only some of the messages” sent by LedgerX to the CFTC.

Auditors have ”never seen this thing before”

In addition to this, LedgerX also claims to have had direct contact between Giancarlo and one of LedgerX’s board members. Moreover, this appears to hint that the blog post written by Chou is the reason for this supposed animosity. Specifically, the report says that Giancarlo noted that LedgerX’s Derivatives Clearing Organization registration would fail on purpose.

”[Giancarlo] told him that he was going to make sure our DCO order was revoked within two weeks, due to a blog post written by myself the previous year implying that preferential treatment was being given to larger companies so he could ‘cement his legacy.’ This refers to the ICE / Bakkt approval, which was running into issues that were frustrating the chairman.”

Furthermore, the report goes on to suggest that the CFTC asked LedgerX to seek insurance and go through a SOC 1 Type 2 audit. Moreover, LedgerX also claims that a CFTC staffer may have interfered with the firm’s audit.

According to some auditors at LedgerX, they had apparently ”never seen this kind of thing before”. Moreover, the second letter from LedgerX also makes it plain that the firm’s application had been pending over 250 days. 

At the time of writing, this number would be over 300. Additionally, the report also stresses that the CFTC has 180 days to either approve or deny an application under federal law.