new York
CNN
—
Sam Bankman Friedthe founder of failed crypto exchange FTX, has agreed testify before the House Financial Services Committee next week amid questions and confusion over the collapse of his companies.
On Friday, he tweeted that he was “ready to testify [December] 13.”, and said he will “try to be helpful and get rid of as much as possible” about several lawmaker concerns, including FTX US’s ability to pay, “ways” that could bring “value” back to users, which he thinks what caused the crash, and finally his “own failure”.
“I saw myself as a model CEO who wasn’t going to get lazy or unconnected,” Bankman-Fried said wrote on Twitter. “Which made it even more destructive than I did. I am sorry. Hopefully people can learn from the difference in who I was and who I could have been.”
His tweets are in response to requests from several congressmen for testimony.
Democratic Chairman Sen. Sherrod Brown of Ohio and Republican Senator Pat Toomey of Pennsylvania have done so asked him to appear because “significant unanswered questions” concern the collapse of FTX and its sister hedge fund Alameda, both of which filed for bankruptcy on Nov. 11.
“You must answer for the failures of both companies, caused at least in part by the clear misuse of customer funds, which wiped out billions of dollars owed to over a million creditors,” the senators wrote.
Bankman-Fried did not say whether he would agree to the senators’ request to testify at a hearing scheduled for Wednesday.
Separately, Sens. 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 close the traditional banking system rate exposed to turmoil in the crypto space, a largely unregulated, parallel financial system.
“Crypto firms may have tighter ties to the banking system than previously thought,” Warren and Smith wrote. “Banks’ relationships with crypto firms raise questions about the safety and soundness of our banking system and point to potential loopholes that crypto firms may seek to exploit to gain further access.”
Federal prosecutors are investigating the collapse of FTX, an exchange that marketed itself as a beginner-friendly way to gain exposure to what until recently was a booming, albeit highly volatile, digital asset market. FTX also facilitated high-risk leveraged trading, which was not allowed in the United States. (The company was based in the Bahamas.)
FTX was one of the largest crypto exchanges in the world until last month, when it faced a sudden surge in client withdrawals that it was unable to cover. One of the key questions prosecutors are likely to investigate is whether FTX embezzled customer funds when making loans to Alameda.
Bankman-Fried has denied allegations of abuse of customer deposits. “I did not knowingly mix funds,” he told the New York Times last week. “I was honestly surprised at how big Alameda’s position was.”
Federal prosecutors are also investigating whether Bankman-Fried played a role in the collapse of two related cryptocurrencies, Terra and Luna, this spring. according to the New York Timeswhich quoted two people familiar with the matter.
The Times said the issue is part of a widening probe into FTX’s collapse and it’s not clear if prosecutors have found 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 any market manipulation.”
Correction: A previous version of this story incorrectly stated which congressional committee Sam Bankman-Fried said he would testify beforehand. He agreed to testify before the House Financial Services Committee.
