FIRST ON FOX: Sen. Josh Hawley, R-Mo., sent a letter to top Biden administration officials Friday morning requesting information and correspondence regarding the collapse of cryptocurrency exchange FTX.
Hawley, a member of the Senate Judiciary Committee, wrote the letter to Attorney General Merrick Garland, Securities and Exchange Commission (SEC) Chairman Gary Gensler and Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam. He asked the three officials to reveal whether they were investigating FTX or its sister company Alameda Research, and whether their respective agencies had entered into settlements with the two companies.
The Missouri Republican also asked whether the Department of Justice, the SEC or the CFTC had contacted Democratic Party officials regarding FTX and its founder, Sam Bankman-Fried. Bankman-Fried has been a prolific donor to Democratic candidates during the midterm election cycle, funneling nearly $40 million into Democratic coffers in 2021 and 2022. He also donated nearly $10 million to help President Biden get elected in 2020.
“The success of Mr. Bankman-Fried’s criminal business made him one of the richest men in America in a short period of time,” Hawley wrote to officials. “And he has used his ill-gotten gains in the service of the Democratic Party, emerging in recent years as the second-largest individual donor behind only George Soros.”
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“To be clear, Mr. Bankman-Fried funded his lavish donations to the Democratic Party through extensive fraud,” Hawley said. “The net result was that billions of dollars were stolen from investors and handed over to Democrats and left-wing organizations.”
He added that the collapse of the FTX, which came so soon after the midterm elections, was suspicious and raised questions about whether federal regulators and law enforcement agencies “face a conflict of interest in identifying, investigating and preventing a fraud scheme.”
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Last week, FTX filed for bankruptcy after a liquidity crisis forced customers to leave the platform. Binance, a larger rival to FTX, backed out of the merger agreement after analyzing the exchange’s financial filings.
After FTX’s collapse, Bankman-Fried stepped down as the company’s CEO, and his fortune plummeted from about $16 billion to almost nothing, according to Bloomberg. Bankman-Fried apologized to FTX users on Twitter and said “f—ed”.
FTX’s new CEO, John Ray III, wrote in the bankruptcy filing that he had never seen “the complete failure of corporate control and the complete absence of reliable financial information that occurred here.”
Hawley Garland, Gensler and Behnama wrote: “Mr. Bankman-Fried withdrew customer deposits from FTX to offset losses at Alameda, a violation of the exchange’s terms of service.” “To paper over the fact that FTX was depleting its assets, Mr. Bankman-Fried filled FTX’s asset book with near-zero artificial assets and grossly misrepresented the value of these assets.”
“Public disclosure of this activity caused the value of exchange-linked assets to plummet, created a liquidity crisis as customers raced to withdraw their deposits, and resulted in both FTX and Alameda filing for bankruptcy,” he said. “Customers are holding the bag now.”
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Hawley asked the three agencies to share the requested information and correspondence with his office by Nov. 25, 2022.
The DOJ, SEC and CFTC did not immediately respond to requests for comment.