Former FTX CEO Sam Bankman-Fried agreed on Friday to testify before the House Financial Services Committee next week.
FTX filed for bankruptcy last month after users discovered that the cryptocurrency exchange was likely fraudulently intertwined with Alameda Research; both were controlled by Bankman-Fried and a close-knit group of amateur executives. The disgraced entrepreneur announced his intention to appear before lawmakers on December 13 during a social media exchange with House Financial Services Committee Chairwoman Maxine Waters (D-CA).
“I still do not have access to much of my data — professional or personal. So there is a limit to what I will be able to say, and I won’t be as helpful as I’d like,” he remarked. “But as the committee still thinks it would be useful, I am willing to testify.”
Bankman-Fried expressed willingness to discuss solvency for customers with funds in FTX US, what he believes led to the liquidity crisis, and his “own failings.”
“I had thought of myself as a model CEO, who wouldn’t become lazy or disconnected,” he added. “Which made it that much more destructive when I did. I’m sorry. Hopefully people can learn from the difference between who I was and who I could have been.”
The now-broke entrepreneur was initially hesitant to appear before lawmakers, as he claimed that he first needed to finish “learning and reviewing what happened.” Waters had been criticized for being extraordinarily polite in her invitation to Bankman-Fried; she told the would-be cryptocurrency wunderkind, who may have lost untold billions in customers’ funds, that lawmakers “appreciate that you’ve been candid in your discussions about what happened.”
Despite the rosy characterization of Bankman-Fried’s talent, current FTX CEO John Ray III, a lawyer who succeeded Bankman-Fried to manage the company’s bankruptcy proceedings, remarked in a court filing that the team overseeing the company was utterly inept. “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” he wrote.
Bankman-Fried, a prolific campaign donor, has denied accusations of criminality. New York Times financial columnist Andrew Ross Sorkin told the entrepreneur that he received multiple letters from FTX customers who accused Bankman-Fried of stealing their life savings, prompting him to say that he was “deeply sorry about what happened.” After Sorkin pressed him on the alleged intertwining of funds between his companies, Bankman-Fried claimed that a “failure of oversight” on his part resulted in confusion rather than any desire to defraud investors for his own profit.
The New York Times had previously run a puff piece claiming that the potential fraudster’s “ambitions exceeded his grasp.” Other media outlets had portrayed Bankman-Fried as a generous “effective altruist” who donated his fortune to causes such as “pandemic prevention.”
Beyond the scheduled hearing for the House Financial Services Committee, members of the Senate Agriculture Committee held a hearing last week with Commodity Futures Trading Commission Chairman Rostin Behnam on increasing federal oversight of the cryptocurrency sector. Officials at the Securities and Exchange Commission have opened a criminal investigation into Bankman-Fried to determine whether he broke the law by transferring FTX customer funds to Alameda Research, according to a report from The New York Times.