Key Takeaways
- The U.S. House Financial Services Committee will hold a hearing on the collapse of FTX in December.
- It will seek testimony from former FTX CEO Sam Bankman-Fried, Alameda Research, Binance, and FTX itself.
- With over one million victims and counting, the FTX scandal is the largest crypto-related fraud in history.
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Lawmakers in the United States have announced that they will hold a hearing on the collapse of FTX.
FTX Faces Government Hearing
FTX and its officers will soon face an inquiry from the U.S. Congress.
According to Reuters, the U.S. House Financial Services Committee will hold the hearing in December. The hearing will seek testimony from representatives of FTX, Alameda Research, and Binance, among others. Sam Bankman-Fried, FTX’s founder and former CEO, is also expected to testify.
Rep. Maxine Waters (D-CA) said that FTX’s failure posed “tremendous harm to over one million users, many of whom were everyday people.” She noted that those investors “put their hard-earned savings” into the exchange and watched as their funds vanished “within a matter of seconds.”
Rep. Patrick McHenry added that lawmakers intend to “hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system.”
The company’s collapse occurred over the course of last week after a bank run on the exchange revealed deep holes in its balance sheets. Competitor exchange Binance briefly floated a rescue plan but abandoned it after seeing the state of FTX’s books. FTX later suspended user withdrawals before it finally announced bankruptcy last Friday.
At least two investigations into Bankman-Fried’s exchange are currently active. Police in the Bahamas announced a criminal investigation into FTX on Sunday, while third-party reports say that the U.S. SEC and Department of Justice (DOJ) are investigating the company.
On November 10, U.S. senator Debbie Stabenow urged U.S. Congress to pass legislation to prevent similar incidents.
In the public sphere, investors have launched a class action lawsuit against FTX’s celebrity endorsers. Those named in the suit include pro athletes Tom Brady, Stephen Curry, and Naomi Osaka, model Gisele Bündchen, entrepreneur Kevin O’Leary, and comedian Larry David.
Other individuals have demanded an investigation into SEC chair Gary Gensler’s possible relationships with FTX and its officers, though it is not yet clear that those suspicions have merit.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other crypto assets.
