Sean Moran
The leaders of the House Financial Services Committee announced on Wednesday that the committee will hold a bipartisan hearing in December on the collapse of the digital currency exchange FTX.
Financial Services Committee chair Maxine Waters (D-CA) and ranking member Patrick McHenry (R-NC) said they expect to hear from the companies and leaders involved, including FTX CEO Sam Bankman-Fried, Alameda Research, FTX, and related entities.
Waters said in a statement:
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. Unfortunately, this event is just one out of many examples of cryptocurrency platforms that have collapsed just this past year. That’s why it is with great urgency that I, along with my colleague Ranking Member McHenry, announce the Committee’s intention to hold a hearing to investigate the collapse of FTX. As Chairwoman of the Financial Services Committee, I have led the effort in examining and investigating the digital assets marketplace, and know that we need legislative action to ensure that digital assets entities cannot operate in the shadows outside of robust federal oversight and clear rules of the road. I look forward to holding this important hearing, and uncovering all that Congress must do to ensure this never happens again.
A mid-November report from CNBC claimed that the quant trading firm Bankman-Fried founded, Alameda Research, used customer deposits from his exchange, FTX, in a way that went unnoticed by investors, employees, and auditors. CNBC wrote that Alameda Research used billions of dollars without their knowledge.
As Breitbart News’s tech reporter, Lucas Nolan, noted regarding Bankman-Fried’s business activities:
There is no indication that FTX customers were aware of this activity. According to U.S. securities law, mixing customer funds with counterparties and trading them without explicit consent is generally illegal. FTX’s terms of service also prohibit this kind of behavior. Sam Bankman-Fried declined to comment on allegations that he misappropriated customer funds, but he did acknowledge that FTX’s recent bankruptcy was caused by problems with a leveraged trading position.
Chairwoman Waters and I are announcing a House Financial Services Committee hearing on the FTX debacle. Oversight is one of Congress’ most critical functions and we must get to the bottom of this for FTX’s customers and the American people. It’s essential that we hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system. I appreciate Chairwoman Waters’ working with Republicans to deliver accountability through a bipartisan process.”
Rep. Andy Barr (R-KY), the lead Republican on the Financial Services Subcommittee on National Security, International Development, and Monetary Policy, said in a statement:
The “effective altruism” that Democrat mega donor Sam Bankman-Fried peddled is perfectly in line with the radical left’s efforts to redefine a corporate purpose. It’s time for corporations and CEOs to stop putting politics ahead of the people, shareholders, and retail investors for whom they are supposed to deliver maximum financial returns. The House Financial Services Committee will work to expose any impropriety that led to this historic collapse and hold regulators accountable for being asleep at the switch, obsessing about “climate risk” instead of actually protecting investors vulnerable to crypto exchanges with limited transparency and poor risk management.
As Breitbart News Economics Editor John Carney cataloged in Tuesday’s Breitbart Business Digest, Bankman-Fried still believes he can raise enough money to make users whole despite the roughly $8 billion hole in the company’s balance sheet.
Sean Moran is a congressional reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
