David Corn - Kelly Loeffler's Conflict of Interest Is Even Worse Than Reported [View all]

[Algernon Moncrieff]

Mother Jones

The CFTC is highly important for ICE. As the firm’s annual report put it, several of its exchanges are “subject to extensive regulation by the Commodity Futures Trading Commission.” The Wall Street Journal noted that the CFTC’s “rule-making agenda can have a major impact on the company’s operations.” While a senior exec at ICE, Loeffler criticized the CFTC for proposing “excess regulation.”

One particular conflict was rather obvious. In 2018, Loeffler left the ICE corporate team to become head of Bakkt, a new federally regulated market for trading Bitcoin that ICE launched. A short time later, when she was a senator overseeing the CFTC, ICE was concerned that Bakkt could be severely hurt by CFTC regulations. ICE pointed this out in a filing it submitted to the Securities and Exchange Committee in February 2020. The filing noted that the “CFTC has designated bitcoin as a commodity…subject to the CFTC’s jurisdiction and enforcement powers.” It stated that if the CFTC pursued an aggressive approach to this exchange, “it may have a significant adverse impact on Bakkt’s business and plan of operations.” ICE pointed out that CFTC activity—or the lack thereof—was crucial for the future prospects of the venture Loeffler once headed: “Ongoing and future regulatory actions may impact the ability of Bakkt to continue to operate, and such actions could affect the ability of Bakkt to continue as a going concern.” (In March 2020, the CFTC issued a major decision affecting cryptocurrency markets.)

And Loeffler had a direct financial interest in Bakkt. In early 2019, she was awarded a $15.6 million stake in a company that owned a chunk of Bakkt—about half of which she cashed out at the end of that year when she left the firm, in an arrangement criticized by corporate governance experts.