Sam Bankman-Fried is facing an onslaught of legal repercussions over his involvement in the collapse of FTX, the cryptocurrency trading platform he founded in 2019, with congressional investigations set to take off over the course of the upcoming weeks.
The Senate Agriculture Committee, which is tasked with oversight of the Commodity Futures Trading Commission (CFTC), is planning to hold a hearing on the rapid collapse of FTX this week, with the office of GOP Ranking Member John Boozman of Arkansas giving FOX Business details about the hearing. Boozman’s office said the hearing will feature CFTC Chairman Rostin Behnam and focus on “the need to bring transparency and accountability to the crypto market.”
“We have previously held hearings on the CFTC’s role in regulating digital assets, and Chairwoman Stabenow and Ranking Member Boozman introduced legislation on it, but the committee is revisiting the issue in light of the events of the past few weeks,” a spokesperson for Boozman said in a statement.
“The hearing will give us an opportunity to ask Chairman Behnam what the CFTC needs from Congress to establish a regulatory framework that will give consumers greater confidence that their investments are safe,” the statement continued.
Boozman’s office also pointed to the senator’s statement on the Digital Commodities Consumer Protection Act of 2022, the legislation he and Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., introduced following FTX’s collapse.
Earlier this month, the Bahamas-based FTX filed for bankruptcy after a liquidity crisis led to a mass exodus of customers from the platform. Bankman-Fried had allegedly transferred $10 billion worth of customer credit from FTX to sister firm Alameda Research, according to multiple reports.
Amid the company’s demise, Bankman-Fried’s estimated net worth plummeted from more than $15 billion to no material wealth in just days, Bloomberg reported. The former billionaire issued a public apology admitting he had “f—ed up” and the new FTX CEO stated during court proceedings that he had never before seen “such a complete failure.”
“From compromised systems integrity and faulty regulatory oversight abroad, 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 on Nov. 17.
Ray III previously oversaw the bankruptcy proceedings of failed emery company Enron in early the 2000s. The FTX collapse has also been compared to scandals involving Lehman Brothers and the Ponzi scheme masterminded by former NASDAQ Chairman Bernie Madoff.
House Financial Services Committee Chair Maxine Waters, D-Calif., and the panel’s top Republican, Rep. Patrick McHenry, R-N.C., also announced a hearing to investigate FTX. In their joint announcement, the two leaders said their hearings would take place in December and are expected to feature Bankman-Fried as well as other leaders from FTX and Alameda Research.
“The fall of FTX has posed tremendous harm to over one 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 within a matter of seconds,” Waters said on Nov. 16.