Two U.S. senators are threatening to subpoena Sam Bankman-Fried, the founder of FTX, to compel him to testify at a Senate committee hearing on the collapse of his crypto exchange next week.
Brown, the chair of the Senate committee, and Toomey have stated that they are prepared to issue a subpoena to Bankman-Fried if he refuses to appear voluntarily.
Bankman-Fried resigned from FTX in early November after it fell apart, when a run on deposits exposed an $8 billion hole in the exchange’s accounts, causing the company to collapse.
Brown’s office wrote Bankman-Fried that he “must answer” for the failures of FTX Trading Ltd. and of his hedge fund, Alameda Research, which are the two entities in the now-bankrupt FTX network.
“As the founder and CEO of FTX Trading Ltd. at the time of its collapse and the founder, principal owner, and former CEO of Alameda Research, you must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors,” wrote Brown.
Sam Bankman-Fried Asked to Testify in Front of Both the Senate and the House
Meanwhile, Rep. Maxine Waters (D-Calif.), chairwoman of the House Financial Services Committee, invited Bankman-Fried to appear in front of her committee for a hearing scheduled for Dec. 13.Bankman-Fried responded to Waters via Twitter on Dec. 4 that he “will testify” before the House Financial Services committee to discuss the circumstances of FTX’s collapse, but he said that it could be a while before he actually planned to appear before Congress and only after he first figured out had “what happened.”
Former FTX CEO Is Allegedly Hesitant to Appear on Capitol Hill
Jake Chervinsky, head of policy at the Blockchain Association, believes that Bankman-Fried is worried about testifying under oath in front of Congress.Waters sent another tweet to the former FTX on Dec. 8, this time with tougher rhetoric.
CNBC reported that the Waters wanted the committee staff to convince Bankman-Fried to testify voluntarily, despite his hesitancy to comply.
Bankman-Fried was known to be a major donor on Capitol Hill, along with his cofounder and ex-girlfriend, Caroline Ellison.
FTX and Alameda Research Under a Probe by Federal Authorities
Meanwhile, federal prosecutors at the Office for the Southern District of New York and attorneys for the Securities and Exchange Commission (SEC) have sent requests for information to cryptocurrency investors and trading firms that have worked with FTX.Federal prosecutors and the SEC are currently examining whether FTX broke the law by transferring its customer funds to Alameda.
The Department of Justice (DOJ) has stated that there should be an independent investigation into the failed crypto exchange, regarding fraud allegations revolving around its collapse, reported Breitbart.
Andrew R. Vara, a DOJ trustee, said that “An examiner could—and should—investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement by the debtors.”
FTX was under investigation well before its collapse for violations of U.S. anti-money laundering laws that required cash transfer businesses to clearly identify their customers and to flag any potentially illegal activity to the authorities, reported Bloomberg.Bankman-Fried Goes on Media Speaking Tour and Hires New Legal Representation
Bankman-Fried went on a weeks-long speaking media tour on podcasts and interviews, even while being asked to testify. He also appeared online at a summit hosted by The New York Times from his home in the Bahamas.The former CEO is additionally facing multiple class-action lawsuits aimed either directly at him or his companies, or both.
A former federal prosecutor, Cohen was previously part of the legal team of Ghislaine Maxwell, the late Jeffrey Espstein’s convicted sex trafficking partner.
The former FTX CEO replaced his former law firm, Paul Weiss Rifkind Wharton & Garrison, after he ignored legal advice to not participate in the recent media interviews.
His former attorneys parted ways, citing a conflict of interest.