Although Sam Bankman-Fried was virtually absent from the congressional hearing due to his recent arrest in the Bahamas, US lawmakers did not remain silent, criticizing the former FTX CEO and the company’s business practices. As the sole witness before a Financial Services Committee hearing on Dec. 13, FTX CEO John Ray shed light on much of the cryptocurrency exchange’s activity before his inauguration as head of the company on Nov. 11 and what subsequent investigations have found.
According to Ray, Alameda Research had relied on funds from FTX Trading, the international arm of FTX Group, with no “internal controls or separation” between the two companies. FTX’s CEO testified that referring to Bankman-Fried, the owners of both Alameda and FTX could “govern freely” in most of the FTX Group’s companies, with any split being a difference to the public rather than reality. In response to questions from Missouri representative Ann Wagner, Ray added that what differentiated FTX’s financial troubles from high-profile failures like those of energy giant ENRON was that there were “no records whatsoever” as many bills and expense receipts went through Slack went.
Many members of the House of Representatives who spoke with FTX’s CEO questioned whether Bankman-Fried’s actions could be intentional or gross incompetence many errors” when moving users from FTX to Alameda. “I don’t find claims like that credible,” Ray said. Texas Rep. Al Green quoted Martin Luther King Jr. in an apparent attempt to understand Bankman-Fried’s actions of: “Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity” and whether there was “embezzlement” in FTX.
“Mr. Bankman-Fried made it pretty clear that he just made a big mistake, that he did his best to be a servant of great service to humanity,” Green said. “I find it difficult; we’re dealing with deliberate stupidity. Oklahoma Assemblyman Frank Lucas added, “Bankman-Fried was trying to portray himself as the smartest of the smart, but being smart doesn’t make you honest or stupid, does it?
Although Bankman-Fried was not present to testify before the committee, lawmakers confirmed the contents of the written testimony leaked after his arrest. Missouri Representative Emanuel Cleaver called SBF’s immediate use of profanity “disrespectful” and “absolutely offensive” in his opening statement.’ to Congress. Lawmakers added that considering recent events, they will consider introducing a resolution renaming the cryptocurrency “creepy mass currency.” “Mr. Bankman Fried has.
It pretty much indicated that he had just made a big mistake and was doing his best to be of great service to humanity,” Green said. “I find it hard to believe that we are dealing with the Oklahoma Congressman. Frank Lucas added, “Bankman-Fried was trying to portray himself as the brightest of the bright, but being brilliant doesn’t make you honest or stupid, does it? Although Bankman-Fried was not present to testify before the committee, lawmakers confirmed the contents of the written testimony leaked after her arrest.
Missouri Rep. Emanuel Cleaver called SBF’s immediate use of profanity in his opening statement “disrespectful” and “absolutely offensive” to Congress.
The House Committee hearing was the second to examine the collapse of FTX, following a December 1 Senate Agriculture Committee hearing at which Commodity Futures Trade Committee Chairman Rostin Behnam was the sole witness. The CFTC and the Securities and Exchange Commission later filed separate lawsuits against SBF, FTX, and Alameda for fraud. The Senate Banking Committee also scheduled hearings for December 14 with Hollywood star Ben McKenzie, investor Kevin O’Leary, law professor Hilary Allen, and The Cato Institute’s Center for Monetary and Financial Alternatives has appointed Jennifer Schulp, director of financial regulation studies, to serve as a witness. It’s still being determined if lawmakers will call Bankman-Fried to testify amid their ongoing legal troubles.