Members of Congress want to hear from Sam Bankman-Fried and other crypto executives about FTX’s sudden and complete collapse, including the impact it’s had on customers and the entire digital asset ecosystem.
Bipartisan leadership of the House and Senate financial regulatory committees said they’re looking to hold hearings on the matter. And they want SBF and others to testify over allegations of fraud and massive malfeasance.
The next steps beyond investigating what happened remain unclear. But members of both parties, with wide-ranging perspectives on digital assets, want to know how a high-flying crypto exchange could be “FINE!” one day and bankrupt the next.
Though it’s early in the process, the hefty donations Bankman-Fried and other FTX executives spread around to politicians do not appear to have insulated them from congressional scrutiny.
“We’ll have a hearing and we’ll find out as much as we can about what’s been going on,” said House Financial Services Committee Chair Maxine Waters, D-Calif. A December hearing on the matter announced by the committee this morning will also look at the role public comments made by Binance CEO Changpeng "CZ" Zhao, a senior member of the panel confirmed to The Block.
Rep. Patrick McHenry, R-N.C., who is expected to lead the committee in the next Congress now that Republicans have taken a majority in the House of Representatives, said that FTX’s implosion, the market fallout, and whether the Securities and Exchange Commission could have prevented any of it, would all be lines of inquiry.
“This is serious. I think that this is a major event,” McHenry said. “We’re certainly going to prioritize this next Congress.”
Bankman-Fried did not respond to a request for comment on if he would accept an invitation to testify. Zhao tweeted this afternoon that Binance would not send a representative to the hearing.
Binance did respond to a similar inquiry made earlier this week from the UK Parliament, prompting a two-page response. The company explained Zhao’s tweets about FTX as providing, “clarity in relation to the above speculation and in the interests of being fully transparent with the community, Binance’s CEO publicly announced the following day Binance’s decision to liquidate the remaining FTT on its books.”
SBF to D.C., one more time?
It’s unclear if the government relations team that shuttled Bankman-Fried between his frequent Washington, D.C. meetings remains at FTX’s U.S. arm. Both members of the team have not responded to several inquiries and appear to have scrubbed their employment history with the company from their LinkedIn profiles. Outside firms hired by FTX to lobby on its behalf have also reportedly quit after the exchange's failure.
Bankman-Fried is also no longer the CEO of his company, and the U.S. Justice Department and regulators also are reportedly investigating the situation. He appears to have done a 180-degree turn on his previous Washington-friendly approach, reportedly telling a reporter by Twitter direct message that his entire lobbying push for more regulatory framework was “PR”.
All of that could make it hard for Congress to obtain the testimony of the disgraced former crypto mogul.
“I assume that Sam Bankman-Fried is on a private submarine headed to Dubai, so I think that it’s going to be hard to get him unless Maxine has some depth charges,” said Rep. Brad Sherman, D-Calif., Congress’ biggest cryptocurrency skeptic. “I think he’s fleeing from justice much less from committee testimony.”
Senate Banking Committee Chair Sherrod Brown, D-Ohio, told The Block that he wants to do “something” but is still formulating what that could look like.
“I don’t know if it’s going to bring in FTX per se, it may be the SEC, we’re gonna definitely do something,” Brown said, he said.
Two Republicans on Brown’s committee supported holding a hearing on the matter.
The current top Republican on the Banking Committee, Pennsylvania Sen. Pat Toomey thought a hearing would be, “a good idea,” while Louisiana Sen. John Kennedy became visibly upset while discussing FTX, saying he was “appalled.”
“We need to spend a lot of time on this and unravel the whole thing, and somebody needs to go to jail,” Kennedy said.
With additional reporting by Stephanie Murray and Kollen Post.
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