Sam Bankman-Fried is facing a flurry of legal repercussions over his involvement in the collapse of FTX, the cryptocurrency trading platform he founded in 2019, with congressional investigations set to kick off in the coming months. weeks.
The Senate Agriculture Committee, which is responsible for overseeing the Commodity Futures Trading Commission (CFTC), plans to hold a hearing on the rapid collapse of FTX this week, the office of GOP ranking member John Boozman of Arkansas giving details about FOX Business. about the hearing. Boozman’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 have previously held hearings on the role of the CFTC in regulating digital assets, and Chair Stabenow and Ranking Member Boozman have introduced legislation on this, but the committee is revisiting the issue in light of the events of over the past few weeks,” a Boozman spokesperson said. said in a statement.
“The hearing will give us the opportunity to ask Chairman Behnam what the CFTC expects from Congress to establish a regulatory framework that will give consumers greater confidence in the security of their investments,” the statement continued.
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Boozman’s office also pointed to the senator’s statement on the Digital Products Consumer Protection Act of 2022, legislation he and Agriculture Committee Chair Debbie Stabenow, D-Mich., introduced after the collapse of FTX.
Earlier this month, Bahamas-based FTX filed for bankruptcy after a liquidity crunch led to a mass exodus of customers from the platform. Bankman-Fried reportedly transferred $10 billion in customer credit from FTX to sister company Alameda Research, according to multiple reports.
Amid the company’s demise, Bankman-Fried’s estimated net worth plummeted from more than $15 billion to no material wealth in just days. The former billionaire issued a public apology admitting he had “screwed up” and FTX’s new CEO told court proceedings he had never seen “such a complete failure”.
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“From the compromised integrity of systems and faulty 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.” , said the company’s new CEO, John Ray III, on November 2. 17.
Ray III previously oversaw the bankruptcy proceedings of bankrupt emery company Enron in the early 2000s. The collapse of FTX has also been compared to scandals involving Lehman Brothers and the Ponzi scheme orchestrated by the former NASDAQ Chairman Bernie Madoff.
House Financial Services Committee Chair Maxine Waters, D-Calif., and top Republican on the panel, Rep. Patrick McHenry, RN.C., also announced a hearing to investigate FTX. In their joint announcement, the two executives said their auditions would take place in December and were expected to feature Bankman-Fried as well as other executives from FTX and Alameda Research.
“The downfall of FTX caused massive harm to over a million users, many of whom were everyday people who invested their hard-earned life savings in the FTX cryptocurrency exchange, only to see it all disappear in a matter of seconds. seconds,” Waters said on Nov. 16.
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And Sen. Sherrod Brown, D-Ohio, chairman of the banking committee and member of the finance committee, said he plans to conduct his own investigations but fears some lawmakers may have conflicts of interest given their ties. financiers with 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 tough when a lot of members here, especially the more pro-banking and business-friendly members, took money from crypto companies and sang their praises in the halls of the Senate,” Brown told Fox News on November 17. .
“That’s the fundamental problem. That’s why I push, especially push, the [Securities] Exchange Commission (SEC) to crack down and make sure they are held accountable for what they have done,” he said.
Bankman-Fried has contributed to Boozman’s and Stabenow’s campaigns this year, according to Federal Election Commission data. He wired $50,000 to the Heartland Resurgence group which primarily supported Boozman and opposed his Republican challenger in his state’s 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, Judiciary Committee member Sen. Josh Hawley, R-Mo., has asked several high-level federal regulators to pass on relevant information regarding FTX and their investigations into the platform. Like Brown, he warned that some politicians tasked with reviewing the crisis could be compromised.
“To be clear, Mr. Bankman-Fried funded his lavish donations to the Democratic Party through rampant fraud,” Hawley wrote to the heads of the Department of Justice (DOJ), SEC and CFTC, in a letter from the November 18. “The net result was that billions of dollars were stolen from investors and given to Democrats and left-wing organizations.”
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Bankman-Fried reportedly cooperated with authorities in the Bahamas where he resides. The federal government may seek to extradite Bankman-Fried to the United States amid ongoing criminal investigations.
The DOJ and the SEC are among the US agencies to have launched their own investigations into the founder of FTX.
Stabenow’s office did not respond to a request for comment.
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