FTX founder Sam Bankman-Fried says he’ll testify before Congress

New York

Sam Bankman Friedthe founder of failing crypto exchange FTX, has agreed to testify before the House Financial Services Committee next week as questions and confusion swirl over the collapse of his businesses.

On Friday, he tweeted that he was “ready to testify on [December] 13th,” and said he “will try to be helpful and get rid of what I can” on several of lawmakers’ concerns, including the solvency of FTX US, “avenues” that could return “value to users, what he thinks about it. what led to the crash and, finally, his “own failures”.

“I thought of myself as a model CEO, who wouldn’t get lazy or disconnected,” Bankman-Fried wrote on Twitter. “Which made it even more destructive when I did it. I am sorry. I hope people can learn from the difference between who I was and who I could have been.

His tweets respond to requests from several members of Congress who have demanded testimony.

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

“You must answer for the failure of both entities which was caused, at least in part, by the gross misuse of client funds and wiped out billions of dollars owed to over a million creditors,” wrote the senators.

Bankman-Fried did not say whether he would also comply with the Senators’ request that he testify at a hearing scheduled for Wednesday.

Separately, the senses. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, 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 assess the traditional banking system. exposure to turbulence in the crypto space, a largely unregulated parallel financial system.

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

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

FTX was one of the biggest crypto exchanges in the world until last month when it faced a sudden wave of customer withdrawals that it couldn’t cover. One of the main issues prosecutors are likely to examine is whether FTX misappropriated customer funds when it made loans to Alameda.

Bankman-Fried has denied accusations of misusing customer deposits. “I did not knowingly mix funds,” he told The New York Times last week. “I was frankly surprised by the size of Alameda’s position.”

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

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

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

Correction: An earlier version of this story incorrectly stated which congressional committee Sam Bankman-Fried said he would testify before. He agreed to testify before the House Financial Services Committee.

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