WASHINGTON (AP) — Lawmakers plan to investigate the failure of FTX, the major crypto exchange that collapsed last week and filed for bankruptcy, leaving investors and customers facing losses which could total billions of dollars.
The House Financial Services Committee said Wednesday it expects to hear from Sam Bankman-Fried, the 30-year-old founder and former CEO of FTX, who was previously hailed as a hero in the crypto community, but is making now facing potential civil and criminal prosecution. related to the collapse of FTX.
The panel also expects to hear testimony from representatives of FTX, other crypto exchanges including Binance, the Bankman-Fried hedge fund, Alameda Research and others at a hearing in December.
“The downfall of FTX caused massive harm to over a million users, many of whom were everyday people who invested their hard-earned life savings in the FTX cryptocurrency exchange, only to see it all disappear in a matter of seconds. seconds,” said committee chairman Rep. Maxine Waters (D-CA) said in an emailed statement.
FTX filed for bankruptcy protection on Friday, sending shockwaves through the cryptocurrency industry, which has seen tremendous volatility this year, including a sharp drop in the price of bitcoin and other digital assets. .
But the sheer scale of FTX’s collapse highlights the massive market risks inherent in the growing crypto industry. Billions of dollars of wealth may have been destroyed in a matter of days. The circumstances prompted investigations by the Department of Justice and the Securities and Exchange Commission.
“We need to get to the bottom of it for FTX customers and the American people,” Rep. Patrick McHenry (RN.C.) said. “It’s critical that we hold bad actors accountable so that responsible actors can harness technology to build a more inclusive financial system.”
Bankman-Fried has previously testified before Congress, telling a Senate Agriculture Committee hearing on the risks posed by digital assets in February that crypto firms should address risk to “protect against losses.” substantial or catastrophic events that could result in existential threats to their own business, thereby jeopardizing their clients’ assets.
In March, President Joe Biden issued an executive order directing the Treasury Department and other agencies to study the impact of cryptocurrency on financial stability and national security.
Treasury Secretary Janet Yellen has said in several Hill hearings this year that more government regulation is needed to control the proliferation of cryptocurrency, because of the risks posed to financial markets.
“Our regulatory frameworks must be designed to support responsible innovation while managing risks, especially those that could disrupt the financial system and the economy,” Yellen said in April.
AP reporter Ken Sweet in New York contributed to this report.