Sam Bankman-Fried to Testify Before Congress on FTX Failure

Sam Bankman-Fried to Testify Before Congress on FTX Failure

FTX founder Sam Bankman-Fried will testify next week at a US Congressional hearing on the collapse of his crypto group, in a twist that will mark his first public contact with US officials about the events surrounding its bankruptcy.

Maxine Waters, chair of the U.S. House Committee on Financial Services, announced on Friday Bankman-Fried’s participation in the first hearing on the topic scheduled for Dec. 13. Only a few hours before the entrepreneur declares himself “ready to testify”.

Panel investigates FTX collapse as lawmakers try to figure out how Bankman-Fried’s $32 billion crypto empire imploded, potentially leaving millions of creditors, including retail investors, with losses .

The 30-year-old has been the subject of a media blitz since FTX filed for bankruptcy last month, giving interviews to numerous media outlets against the advice of his lawyers in an apparent attempt to explain his role and his understanding of the events that led to its collapse, but he expressed reluctance to speak to Congress.

Now he’s caved to the pressure after Waters made it clear a subpoena was on the table if he refuses, and implored him to speak up to “help customers, investors and others in the company”.

In a series of Twitter posts on Friday, Bankman-Fried said he would be willing to testify. “I still don’t have access to a large part of my data, whether professional or personal. So there is a limit to what I can say, and I will not be as helpful as I would like,” he added.

John J Ray, who took over as chief executive of the now-defunct exchange and is leading its bankruptcy proceedings, is also scheduled as a witness on a separate panel.

The rapid collapse of Bankman-Fried’s crypto empire sent shockwaves through the digital asset industry, triggering multiple investigations around the world, with dozens of authorities seeking to understand how FTX and its store commercial associate Alameda Research have worked and failed. A slew of other crypto firms, including broker Genesis and lender BlockFi, have also struggled due to ties to FTX.

Bankman-Fried, who has remained in the Bahamas since FTX’s collapse, said he would “try to be helpful in the hearing” and shed some light on issues such as “what I think I led to the accident”, “my own failures” and “the ways”. that could bring value to users globally”.

He repeatedly denied knowingly misusing client funds and committing fraud, but admitted a lack of basic risk management and lost track of the warm relationship between FTX and Alameda.

“I had thought of myself as a model CEO, who wouldn’t get lazy or disconnected,” he said on Friday. “I hope people can learn from the difference between who I was and who I could have been.”

US lawmakers are stepping up their scrutiny of the crypto industry. On Thursday, the U.S. Securities and Exchange Commission asked U.S.-listed companies to disclose any impact of the “widespread disruption” on crypto markets. The regulator added that public companies should aim to provide investors with “specific and personalized disclosure” about how market events, including bankruptcies, have affected their business.

Meanwhile, Changpeng “CZ” Zhao, chief executive of crypto exchange Binance, continued his online criticism of his former rival. When FTX first ran into trouble last month, Zhao initially offered to buy some or all of the platform. This deal probably would have represented a bailout deal, but it quickly fell apart.

Binance was also an early investor in FTX and exited the investment last year. Zhao said Friday the move was met with an “unbalanced” response from Bankman-Fried.

“He launched a series of offensive tirades against several Binance team members, including threatening to go all the way to make us pay,” Zhao said. wrote on Twitter.

“You won,” Bankman-Fried replied. “None of this is necessary. You won. Why are you lying about it now? »

Additional reporting by Stefania Palma in Washington

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