LedgerX, a digital currency derivatives company, leveled charges against Christopher Giancarlo, Chairman of the United States Commodity Futures Trading Commission (CFTC) for stalling approval for the registration of its Derivatives Clearing Organization (DCO). The firm claimed that Giancarlo did so due to personal prejudice against the firm’s CEO Paul Chou.
The allegations were made in two letters that have been obtained under the Freedom of Information Act. The first letter states,
We have strong reason to believe that this is in clear violation of the Commodity Exchange Act is related to the Chairman’s animus towards a blog post written by our CEO.
LedgerX states that in January, Giancarlo called one of its board members and said that he will make sure that DCO order was retracted within two weeks. He would be doing so because of the blog post written by Chou, the year before regarding the preferential treatment that was being meted out to larger companies so that he could ‘cement his legacy.’ This refers to the ICE/Bakkt approval that was facing issues, which was frustrating for the chairman.
LedgerX officials claim that CFTC asked them to obtain insurance and also conduct SOC 1 Type 2 audit. They alleged that a CFTC staffer even tried to interfere with the audit process. Some auditors went to the extent of saying that “they had never seen this kind of thing before.” The company said that all this was being done to harass them.
Chou claims that he later received apologies,
Previous chairman wanted to revoke LX license bc Bakkt efforts not moving along. Having no legitimate reason to revoke our license, staff resorted to contacting our independent auditors to tamper with audit to give commission reason to revoke license. Staff admitted and apologized.
In the second letter, the company says that its application has been pending for nearly 250 days now, and according to Federal laws, CFTC now has only 180 days to either approve or deny the application. The letter also states that CFTC’s swap data repository requirements forced LedgerX to report to Intercontinental Exchange’s ICE Trade Vault. This gave the latter a chance to launch a similar service of its own, Bakkt. Chou also claimed that due to this bad blood, he has also been removed from the Technology Advisory Committee of CFTC.