(NEXSTAR) — House lawmakers have dozens of questions for former FTX CEO Sam Bankman-Fried, whose cryptocurrency empire went bankrupt last month amid fraud allegations.
The first is whether he will actually show up to answer them.
Leaders of the House Financial Services Committee are pressuring Bankman-Fried to testify at a December 13 hearing on the FTX collapse and discuss her role in the company’s decline.
In a series of coordinated tweets, Speaker Maxine Waters (D-Calif.) and Ranking Member Patrick McHenry (RN.C.) urged Bankman-Fried to bring her international apology tour to Capitol Hill, either in person or remotely from your home. in the Bahamas After spending weeks giving high-profile interviews, they argue that the least Bankman-Fried could do is talk to lawmakers responsible for cleaning up the FTX mess.
But Bankman-Fried has suggested she won’t be there, arguing that she needs more time to understand how FTX imploded, despite frequently discussing the issue on Twitter and with reporters.
“Once I am done learning and reviewing what happened, I would feel it was my duty to go before the committee and explain it. I’m not sure that happens by the 13th. But when it does, I will testify.” Bankman-Fried he tweeted on friday in response to the efforts of Waters and McHenry.
Waters, however, did not buy it.
“Based on his role as CEO and his media interviews over the past few weeks, it is clear to us that the information he has thus far is sufficient for testimony.” Waters said in a Monday tweet to Bankman-Fried.
“The FTX collapse has harmed more than a million people. Testimony from him would not only be meaningful to members of Congress, but it is also critical to the American people.”
What happened to FTX?
Within three days, FTX clients tried to withdraw billions of dollars in deposits stored on the platform, but the company did not have enough cash to make its clients complete. Once worth $32 billion, FTX and its various affiliates, including Bankman-Fried’s investment firm Alameda Research, filed for bankruptcy in November.
While Bankman-Fried pleaded ignorance before the Financial Services panel, he admitted to several missteps and potentially illegal conduct that set the stage for FTX’s collapse.
Bankman-Fried said he and FTX leaders lacked basic information about how much money he owed clients and how much cash he had to back his obligations. He also said that FTX sent money held by clients on its exchange to finance Alameda’s investments, many of which failed, despite FTX promising users that it would not use client money for such purposes.
“Like you said…you have a duty to ‘try to do the right thing’ and ‘help the customers here,’” McHenry tweeted at Bankman-Fried last week.
“If this is a true statement, testify before the House Financial Services Committee.”
Both Waters and McHenry argue that Bankman-Fried’s testimony is essential to the Financial Services panel’s oversight of financial markets and dominance over cryptocurrency regulation.
What the testimony of Bankman-Fried could contribute
While Democrats and Republicans often spar on the issue, both sides agree that there are serious gaps in the way the federal government oversees and regulates digital tokens, the companies that back them, and the platforms used to store them. and trade cryptocurrencies.
“If you have it [testify]it could be helpful in figuring out some of the things you want to do and legislation going forward,” Ian Katz, a director at research consultancy Capital Alpha Partners, said in an interview Monday.
“Although he has already spoken so much, that information may already be known,” Katz added.
Bringing Bankman-Fried before a House panel would also require her to testify about the FTX collapse under oath. While Congress cannot bring criminal charges against an individual, it can share potentially incriminating material with regulators and law enforcement investigating FTX.
It is also illegal to lie in sworn statements before Congress, raising the risks of Bankman-Fried’s potential appearance. While prosecutors could still build on what Bankman-Fried said in media interviews, his comments to reporters lack the same legal risks.
“Obviously there is a legal and regulatory risk to show up. Members will want to ask a variety of questions, some of which might be intended to help in a regulatory or law enforcement case,” Jason Rosenstock, a partner at lobbying firm Thorn Run Partners, said in an interview Monday.
“But these hearings are very rarely like statements,” he added. “It has some members who are lawyers on both sides of the aisle, but not many who are prosecutors, so the questioning is sometimes less nuanced than you might get in a legal deposition.”
Bankman-Fried’s potential appearance before the Financial Services panel may not produce the irrefutable proof or devastating admission some lawmakers and prosecutors seek. At the very least, lawmakers will be able to enjoy a congressional pastime: criticizing a disgraced CEO on live television while presenting their own legislative responses to the issue at hand.
“They have to show they’re upset,” Katz said. “They have to show that they are standing up for consumers. They have to show that they are defending investors. They have to show that they are working to not allow this kind of thing to happen again.”