The implosion of cryptocurrency exchange FTX has drawn the attention of politicians, with the House and the Senate set to hold hearings on the mess on Tuesday and Wednesday, respectively. The House’s Committee on Financial Services is first up at 10AM ET with a hearing titled, “Investigating the Collapse of FTX, Part I.”
First up to testify is new FTX CEO John J. Ray III, but following the arrest of Sam Bankman-Fried in the Bahamas on Monday and subsequent charge by the SEC, it’s unlikely that the co-founder and former CEO will appear remotely like first planned. As of this morning, the committee’s witness list only names Ray.
Bankman-Fried said he’d participate after a back-and-forth on Twitter with Rep. Maxine Waters, the committee’s chair. Previously, Bankman-Fried warned that he doesn’t have access to much of his personal or professional data and, as such, expressed doubt over how helpful he’d be to the committee.
Last month, Binance agreed to buy FTX, which was facing a liquidity crisis. Binance backed out a day later after taking a look at FTX’s books. FTX then filed for bankruptcy protection and Bankman-Fried stepped down as CEO.
Ray, a corporate restructuring veteran who oversaw Enron’s bankruptcy process, said FTX was in an “unprecedented” mess and that he’d never “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information.” Ray also claimed that Bankman-Fried has been making “erratic and misleading public statements” about FTX. The former CEO has given several interviews since leaving the post.
The collapse of FTX, which has dragged down other players in the crypto industry, could impact more than a million creditors. Prosecutors in the US are said to be investigating Bankman-Fried for possible fraud.
As of the time of writing, Bankman-Fried is not scheduled for the Senate Banking Committee’s hearing on Wednesday. “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers” will feature testimony from American University Washington College of Law professor Hilary J. Allen and Jennifer J. Schulp, the director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives. Investor Kevin O’Leary and actor and crypto critic Ben McKenzie will also testify. That hearing will start at 10AM and you can watch it on the committee’s website.