FTX Founder Says He Will Testify Before Congress

Sam Bankman-Fried, the founder of bankrupt crypto exchange FTX, has agreed to testify before the Senate Banking Committee next week as questions and confusion swirl over the collapse of his companies.

On Friday, he tweeted that he was “willing to testify on Dec. 13” and said he would “try to be helpful and throw out what I can” on several lawmakers concerns, including FTX US solvency, “pathways” that could return “value” to users, what he thinks about what led to the accident and, finally, his “own faults”.

“I considered myself a model CEO who wouldn’t become lazy or disconnected,” Bankman-Fried wrote on Twitter. “Which made it a lot more destructive when I did. I’m very sorry. I hope people can learn from the difference between who I was and who I could have been.”

His tweets are in response to a demand from several members of Congress who demanded testimonials.

Democratic President Senator Sherrod Brown of Ohio and Republican Senator Pat Toomey of Pennsylvania asked him to attend because “significant unanswered questions” about the collapse of FTX and its sister hedge fund, Alameda, which they asked bankruptcy on November 11.

“You must answer for the bankruptcy of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to more than a million creditors,” the senators wrote.

Initially, it was unclear whether Bankman-Fried would comply. Bankman-Fried tweeted on Sunday that he felt he had a “duty to appear before the committee and explain,” but was unsure of the timing.

Separately, Senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, have sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to consider the situation of the traditional banking system. exposure to turmoil in the crypto space, a largely unregulated shadow financial system.

“Crypto companies may have closer ties to the banking system than previously thought,” wrote Warren and Smith. “Banks’ relationships with crypto companies raise questions about the security and soundness of our banking system and highlight potential loopholes that crypto companies may try to exploit to gain more access.”

Investigating FTX

Federal prosecutors are investigating the collapse of FTX, an exchange that marketed itself as a beginner-friendly way to get involved in what was, until recently, a booming, albeit highly volatile, market for digital assets. FTX also facilitated high risk leveraged trading that was not allowed in the United States. (The company was headquartered in the Bahamas.)

FTX was one of the largest cryptocurrency exchanges in the world until last month, when it faced a sudden wave of customer withdrawals that it was unable to cover. One of the main issues prosecutors are likely to investigate is whether FTX misappropriated customer funds when it made loans to Alameda.

Bankman-Fried has denied allegations of misuse of customer deposits. “I didn’t intentionally mix funds,” he told The New York Times last week. “I was frankly surprised by the size of the Alameda position.”

Federal prosecutors are also investigating whether Bankman-Fried played a role in the collapse this spring of two interlinked cryptocurrencies, Terra and Luna, according to the New York Times, which cited two people familiar with the matter.

The Times said the issue is part of a broader investigation into the FTX collapse, and it is unclear whether prosecutors have determined any wrongdoing on Bankman-Fried’s part.

In a statement to the paper, Bankman-Fried said he was “not aware of any market manipulation and certainly never intended to engage in market manipulation”.