FTX Founder on Hot Seat as Congressional Inquiries Move Forward

Sam Bankman-Fried is facing legal repercussions for his involvement in the crash of FTX, the cryptocurrency trading platform that he founded in 2019. The Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission (CFTC), will be holding a hearing on the rapid fall of FTX shortly. 

The office of GOP Ranking Member John Boozman issued a statement about the hearing: “We have previously held hearings on the CFTC’s role in regulating digital assets, and Chairwoman 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.”

The statement continued, “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.”

Former FTX CEO admits he “f—ed up”

Earlier this month, FTX filed for bankruptcy after an unexpected liquidity crisis caused a mass exodus of customers from the crypto platform. According to multiple sources, the founder, Bankman-Fried, transferred customer credit worth billions of dollars to sister firm Alameda before the bankruptcy. 

Since the company’s demise, Bankman-Fried’s net worth dropped from over $15 billion to no material wealth in only a few days. The former bullionaire apologized publicly and admitted that he had “f—ed up.” During court proceedings, John Ray III, the new CEO of FTX, stated that he had never before witnessed “such a complete failure.”

On November 17, Ray III said, “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Ray III was previously in charge of the bankruptcy proceedings of failed company Enron in the early 2000s. The collapse of FTX has been compared to scandals like the Ponzi scheme. 

December hearings to feature Bankman-Fried

House Financial Services Committee Chair Maxine Waters, D-Calif., and Rep. Patrick McHenry, R-N.C., announced a hearing to investigate the failed crypto company. The two leaders said in a joint statement that the hearings are expected to occur in December. Bankman-Fried, as well as other top officials from Alameda Research and FTX, are expected to be a part of the hearings. 

Waters said, “The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds.”