Sam Bankman-Fried is facing an onslaught of legal ramifications from his involvement in the collapse of FTX, the cryptocurrency trading platform he founded in 2019, with congressional investigations set to gather pace in the coming weeks.
The Senate Agriculture Committee, which is tasked with overseeing the Commodity Futures Trading Commission (CFTC), plans to hold a hearing on the rapid collapse of FTX this week, with the office of GOP Ranking Member John Boozman of Arkansas providing FOX Business with details of the hearing . Boozman̵[ads1]7;s office said the hearing will feature CFTC Chairman Rostin Behnam and focus on “the need to bring transparency and accountability to the crypto market.”
“We previously held hearings on the CFTC’s role in regulating digital assets, and Chairman Stabenow and Ranking Member Boozman introduced legislation on it, but the committee is revisiting the issue in light of the events of the past few weeks,” a Boozman spokesperson said. said in a statement.
“The hearing will give us an opportunity to ask Chairman Behnam what the CFTC needs from Congress to establish a regulatory framework that will give consumers greater confidence that their investments are safe,” the statement continued.
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Boozman’s office also pointed to the senator’s statement on the Digital Commodities Consumer Protection Act of 2022, the legislation he and Agriculture Committee Chair Debbie Stabenow, D-Mich., introduced after FTX’s collapse.
Earlier this month, Bahamas-based FTX filed for bankruptcy after a liquidity crisis led to a mass exodus of customers from the platform. Bankman-Fried had allegedly transferred $10 billion worth of customer credit from FTX to sister firm Alameda Research, according to multiple reports.
Amidst the company’s demise, Bankman-Fried’s estimated net worth dropped from more than $15 billion to no tangible assets in mere days. The former billionaire issued a public apology and admitted he had “f—ed up”, and the new FTX boss stated during court proceedings that he had never seen “such a complete failure” before.
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“From compromised system integrity and flawed regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” the company’s new CEO John Ray III said in November. 17.
Ray III previously oversaw the bankruptcy of failed emery company Enron in the early 2000s. The FTX collapse has also been compared to scandals involving Lehman Brothers and the Ponzi scheme masterminded by former NASDAQ chairman Bernie Madoff.
House Financial Services Committee Chair Maxine Waters, D-Calif., and the panel’s top Republican, Rep. Patrick McHenry, RN.C., also announced a hearing to investigate FTX. In their joint announcement, the two executives said their hearings will take place in December and are expected to feature Bankman-Fried as well as other executives from FTX and Alameda Research.
“FTX’s downfall has caused enormous damage to over one million users, many of whom were ordinary people who invested their hard-earned savings in the FTX cryptocurrency exchange, only to see it all disappear in seconds,” Waters said on Nov. 16.
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And Sen. Sherrod Brown, D-Ohio, chairman of the Banking Committee and a member of the Finance Committee, said he planned to lead his own investigations but worried that some lawmakers would have conflicts of interest given their financial ties to the crypto industry. Bankman-Fried alone gave tens of millions of dollars to Democrats ahead of the midterm elections and about $10 million to help President Biden get elected in 2020.
“It’s difficult when a whole lot of members here, especially the more pro-bank, pro-corporate members, have taken money from crypto companies and are singing their praises in the halls of the Senate,” Brown told Fox News on Nov. 17. .
“That’s the fundamental problem. That’s why I’m pushing, especially pushing [Securities] Exchange Commission (SEC) to crack down and make sure they are held accountable for what they have done,” he said.
Bankman-Fried contributed to both Boozman’s and Stabenow’s campaigns this year, according to Federal Election Commission data. He wired $50,000 to the Heartland Resurgence group that primarily supported Boozman and opposed his Republican challenger in his state primary, $20,800 to the Stabenow Victory Fund and maximum individual donations worth $5,800 to each of the legislators’ individual campaigns.
Boozman’s campaign previously told FOX Business that it would donate funds received from Bankman-Fried to charity.
Meanwhile, Sen. Josh Hawley, R-Mo., a member of the Judiciary Committee, asked several top federal regulators to hand over relevant information regarding FTX and their investigations into the platform. Like Brown, he warned that some politicians tasked with overseeing the crisis could be compromised.
“To be clear, Mr. Bankman-Fried financed his lavish donations to the Democratic Party through widespread fraud,” Hawley wrote to the heads of the Department of Justice (DOJ), SEC and CFTC in a Nov. 18 letter. The net result was that billions of dollars were stolen from investors and handed over to Democrats and left-wing organizations.”
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Bankman-Fried is said to have cooperated with the authorities in the Bahamas, where he is still. The federal government may seek to extradite Bankman-Fried to the United States as part of ongoing criminal investigations.
The DOJ and SEC are among the US agencies that have launched their own investigations into the FTX founder.
Stabenow’s office did not respond to a request for comment.