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Sam Bankman-Fried to testify to Congress over FTX failure

FTX founder Sam Bankman-Fried will next week testify at a US congressional hearing about the collapse of his crypto group, in a U-turn that will mark his first public contact with US officials about the events surrounding the bankruptcy.

Maxine Waters, chair of the US House Committee on Financial Services, announced on Friday Bankman-Fried’s participation in the first hearing on the subject scheduled for December 13. Just hours before the entrepreneur said he was “willing to testify”.

The panel is investigating the collapse of FTX as lawmakers try to piece together how Bankman-Fried̵[ads1]7;s $32 billion crypto empire imploded, leaving potentially millions of creditors, including retail investors, with losses.

The 30-year-old has been on a media blitz since FTX filed for bankruptcy last month, giving interviews to a number of outlets against the advice of his lawyers in an apparent attempt to explain his role and understanding of the events leading up to the collapse, but he has expressed reluctance to talk to Congress.

Now he has bowed to pressure after Waters made it clear a subpoena was on the table if he refused, imploring him to speak out to “help the company’s customers, investors and others.”

In a series of Twitter posts Friday, Bankman-Fried said he would be willing to testify. “I still don’t have access to a lot of my data – professional or personal. So there’s a limit to what I can say and I won’t be as helpful as I’d like to be,” he added.

John J Ray, who took over as CEO of the now defunct exchange and is running the bankruptcy proceedings, is also scheduled to testify on a separate panel.

The rapid collapse of Bankman-Fried’s crypto empire has sent shockwaves through the digital asset industry, sparking multiple investigations worldwide, with dozens of authorities seeking to understand how FTX and its related trading shop Alameda Research operated and failed. A number of other crypto companies including broker Genesis and lender BlockFi have also faced stress due to links to FTX.

Bankman-Fried, who has been in the Bahamas since the FTX collapse, said he would “try to be helpful at the hearing” and shed light on issues including “what I think led to the crash”, “my own mistakes” and “ways” that can return value to users internationally”.

He has repeatedly denied knowingly misusing client funds and committing fraud, but has admitted to a lack of basic risk management and losing track of the cozy relationship between FTX and Alameda.

“I had thought of myself as a model CEO, who would not be lazy or disconnected,” he said Friday. “Hopefully people can learn from the difference between who I was and who I could have been.”

US lawmakers are increasing their scrutiny of the crypto industry. On Thursday, the US Securities and Exchange Commission asked US listed companies to disclose any impact from the “widespread disruption” in crypto markets. The regulator added public companies should aim to provide investors with “specific, tailored disclosure” about how market events including bankruptcies had affected their business.

Meanwhile, Changpeng “CZ” Zhao, CEO of crypto exchange Binance, continued his online criticism of his former rival. When FTX first ran into difficulties last month, Zhao first offered to buy some or all of the platform. That deal would probably represent a bailout, but it unraveled quickly.

Binance was also an early investor in FTX and exited its investment last year. Zhao said Friday that the decision was met with an “unhinged” response from Bankman-Fried.

“He launched a series of offensive tirades against several Binance team members, including threats to go to ‘extraordinary lengths to make us pay,'” Zhao wrote on Twitter.

“You won,” Bankman-Fried replied. “None of this is necessary. You won. Why are you lying about this now?”

Additional reporting by Stefania Palma in Washington

Video: Cryptocurrencies: how regulators lost control

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