With FTX on the brink of collapse, former CEO Sam Bankman-Fried has fallen out of favor as the industry’s “darling” in Washington and is under scrutiny from regulators and lawmakers from both parties.
Bankman-Fried, who has been a Capitol resident for the past year as an industry advocate, tweeted his apologies on Thursday. “I failed and should have done better,” he said.
Bankman-Fried has stepped down as CEO of the cryptocurrency exchange he founded and FTX has filed for Chapter 11 bankruptcy protection, the company announced Friday.
The company’s implosion has prompted the Biden White House and two influential Democratic Party chairmen to publicly criticize FTX and call for greater scrutiny of the broader industry.
Aside from the cryptocurrency exchange’s U.S. operations, Bankman-Fried tweeted that the company’s international operations have a higher total market value of assets and collateral than customer deposits, but that’s “liquidity for delivery.” It is different from the sex.The condition of the drawer.”
Another cryptocurrency exchange, Binance, said Wednesday that it will drop its acquisition of FTX “as a result of corporate due diligence and the latest news report regarding mishandling of customer funds and an investigation into a questionable US agency.” Announced. The Securities and Exchange Commission and the Justice Department are reportedly investigating FTX for civil and criminal violations of securities laws.
Rep. Maxine Waters (D-California), chairman of the House Financial Services Committee, is considering launching a congressional investigation and called Bankman Freed to the Hill. , could even testify about the company’s near collapse in the coming weeks. A committee aide who requested anonymity to discuss closed-door deliberations. Democrats are in danger of losing control of the House of Representatives in January, depending on the results of several key elections that have not yet been called.
“More than ever, it is clear that cryptocurrency entities operating without strong federal oversight and customer protection have grave consequences,” Waters said in a statement Thursday.
If the House were to turn Republican, Rep. Patrick McHenry, a key member of the current Republican Committee, would likely become Speaker, though it is unclear what McHenry would do.Numbers from Bankman-Fried The Crypto Innovation PAC, partly funded by another group that raised $1 million in donations, helped McHenry’s 2022 reelection campaign succeed. His CEO of FTX has donated more than $30 million towards his 2022 midterm elections, according to Federal Election Commission records.
But after Binance announced it would acquire the company to avoid a liquidity crisis, he indicated the need for legislation to curb the industry.
“Recent events demonstrate the need for Congressional action,” McHenry said in a statement Tuesday. “It is imperative that Congress establish a framework that allows innovation to thrive here in America while ensuring that Americans have adequate protection.”
At a hearing late last year, Bankman-Fried told lawmakers: Platform as a competitive advantage. ”
Connecticut Democratic Rep. Jim Hymes, a member of the House Financial Services Committee, said it’s clear Bankman-Fried will lose access to the Capitol as investigators uncover what happened. said it was.
“Now you see Washington’s darlings. You know people, mostly Democrats, and that persona just evaporates,” said Hymes when asked about his encounter with Bankman-Fried. At the time, Himes said:
Senator Sherrod Brown (D, Ohio), chairman of the influential Senate Banking Committee, has called on regulators to investigate what happened with FTX.
“It is important that financial watchdogs investigate what led to the collapse of FTX so that fraud and abuse can be fully understood,” Brown said in a statement.
White House Press Secretary Karine Jean-Pierre told reporters on Thursday that FTX’s near demise proves that more regulation is needed.
“The latest news further underscores these concerns and highlights why careful regulation of cryptocurrencies is really necessary,” said Pierre. “The White House, along with relevant agencies, will again closely monitor the situation as it develops.”
Bankman-Fried donated $5 million to a super PAC to help then-candidate Joe Biden take on former President Donald Trump during the 2020 election.
