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Sam Bankman-Fried is facing legal repercussions for his involvement in the collapse of FTX, the cryptocurrency trading platform he founded in 2019, and is facing congressional investigations in the coming weeks.
The Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission (CFTC), plans to hold a hearing this week on the FTX’s rapid collapse, the office of GOP Ranking Member John Boozman of Arkansas told FOX Business. about listening. Boozman’s office said the hearing will be attended by CFTC Chairman Rostin Behnam and will focus on “the need to bring transparency and accountability to the crypto market.”
“We previously held hearings on the CFTC’s role in digital asset regulation, and Chairman Stabenow and Ranking Member Boozman introduced legislation to that effect, but the committee is revisiting the issue in light of the events of the past few weeks,” a Boozman spokesperson said. said in the statement.
“The hearing will give us an opportunity to ask Chairman Behnam what the CFTC needs from Congress to create a regulatory framework that will give consumers more confidence that their investments are safe,” he said.
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Sam Bankman-Fried speaks at the annual membership meeting of the Institute of International Finance on October 13. (Ting Shen/Bloomberg via Getty Images/Getty Images)
Boozman’s office, the senator’s Digital Consumer Protection Act of 2022, legislation introduced after the FTX collapse, which he and Agriculture Committee Chairwoman Debbie Stabenow, D-Mich.
Earlier this month, Bahamas-based FTX filed for bankruptcy after a liquidity crisis led to a mass exodus of customers from the platform. According to multiple reports, Bankman-Fried transferred $10 billion in client loans from FTX to sister firm Alameda Research.
Bankman-Fried’s estimated net worth dropped by more than $15 billion in a matter of days amid the company’s collapse. The former billionaire publicly apologized, admitting that he was “broken”, and the new CEO of FTX stated during the court proceedings that he had never seen “such a failure” before.
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“From compromised systems integrity and flawed regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” the company’s new CEO, John Ray III, said in November. 17.
Ray III previously oversaw the bankruptcy proceedings of the failed emery company Enron in the early 2000s. FTX’s collapse has also been compared to scandals involving Lehman Brothers and the Ponzi scheme masterminded by former NASDAQ chairman Bernie Madoff.
Sen. Debbie Stabenow, left, is pictured with other Senate Democratic leaders and Commerce Secretary Gina Raimondo last year. (Craig Hudson/Bloomberg/Getty Images)
House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and the panel’s top Republican, Rep. Patrick McHenry, RN.C., announced a hearing to investigate FTX. In a joint statement, the two leaders said hearings will take place in December and will be attended by Bankman-Fried, as well as other leaders from FTX and Alameda Research.
“The fall of FTX took a huge toll on over a million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear in a matter of seconds,” Waters said. November 16.
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Sen. Sherrod Brown, D-Ohio, chairman of the Banking Committee and a member of the Finance Committee, said he plans to lead his own investigation but is concerned about conflicts of interest given some lawmakers’ financial ties. crypto industry. Bankman-Fried alone gave tens of millions of dollars to Democrats before the midterm elections and nearly $10 million to help elect President Biden in 2020.
Brown told Fox News on November 17: “It’s difficult for many members here, especially the pro-bank, corporate members, to take money from crypto companies and praise them in the halls of the Senate.”
“This is the main problem. So I push, especially, push [Securities] Let the Securities and Exchange Commission (SEC) apply pressure and make sure they are held accountable for what they did,” he said.
Sen. Sherrod Brown, D-Ohio, is pictured during a Senate Banking Committee hearing on Sept. 28, 2021. (Kevin Dietsch/Pool via Reuters/Reuters Photos)
Bankman-Fried contributed to the campaigns of both Boozman and Stabenow this year, according to Federal Election Commission records. He has given maximum individual donations of $50,000 to Heartland Resurgence, a group that primarily supported Boozman and opposed his Republican challenger in his state’s primary, $20,800 to the Stabenow Victory Fund and $5,800 to each of the legislators’ individual campaigns.
Boozman’s campaign previously told FOX Business it would donate the funds it received from Bankman-Fried to charity.
Meanwhile, the Judiciary Committee member, R-Mo. Senator Josh Hawley has asked several top federal regulators to provide relevant information about their investigations into FTX and the platform. Like Brown, he warned that some politicians tasked with investigating the crisis could compromise.
“To be clear, Mr. Bankman-Fried funded his lavish donations to the Democratic Party through extensive fraud,” Hawley wrote in a Nov. 18 letter to the heads of the Department of Justice (DOJ), SEC and CFTC. The result was that billions of dollars were stolen from investors and handed over to Democrats and left-wing organizations.
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Bankman-Fried is said to be cooperating with authorities in the Bahamas, where he is staying. The federal government may seek to extradite Bankman-Fried to the United States as part of ongoing criminal investigations.
The DOJ and SEC are among the US agencies that have launched their own investigations into the FTX founder.
Stabenow’s office did not respond to a request for comment.