The head of a US House subcommittee has lobbied former and current CEOs of the defunct cryptocurrency exchange FTX, demanding they provide documentation related to the company’s financial transactions.
Raja Krishnamoorthi, chairman of the Consumer and Economic Policy Subcommittee, wrote in a letter dated November 18 that “FTX customers, former employees and the public deserve answers.” The letter was addressed to both former FTX CEO Sam Bankman-Fried and the exchange’s current CEO John J. Ray III, who took over after FTX’s bankruptcy filing. Krishnamoorthi’s letter was addressed to both Bankman-Fried and Ray III.
Additionally, Krishnamoorthi said the subcommittee was “seeking specific information about the considerable liquidity challenges FTX encountered, the company’s unexpected decision to file for bankruptcy, and the potential effect these actions could have on consumers who used its exchange.”
He asked that the exchange turn over a large amount of material related to its finances, including explanations of its liquidity concerns, balance sheets from before it collapsed in early November, its current crypto holdings, and a strategy for how it would compensate consumers.
In addition, Krishnamoorthi requested details about who was responsible for managing the financial aspects of the exchange, any input FTX received from Alameda Research CEO Caroline Ellison, and a description of any “back doors” that may have been used to move secret funds from auditors or other FTX departments.
A request was sent to Bankman-Fried on August 30 requesting information on the efforts FTX is making to prevent fraud and scams. A reminder has been sent to current and past FTX leaders to provide the necessary documentation as part of this application.
Cryptocurrency exchanges Binance US, Coinbase, Kraken, and KuCoin all received letters quite similar to this one.
The subcommittee gave FTX until December 1 to gather the necessary documentation to help it determine “what went wrong with FTX” and what actions Congress could take to ensure that the crypto industry “is properly regulated and investors are protected”. The subcommittee has set a December 1 deadline.
The deadline for the subcommittee coincides with an announcement made on November 16 by members of the Committee on Financial Services of the United States House of Representatives that they will hold a hearing in December to investigate the failure of FTX and the “broader consequences for the ecosystem of digital assets”. The hearing is scheduled for December.
The letter written by Krishnamoorthi follows similar demands that were filed on November 16 by Senators Elizabeth Warren and Richard Durbin. The senators wrote to Bankman-Fried and Ray requesting a similar number of documents related to the FTX collapse. Krishnamoorthi’s letter follows in his footsteps.