The former CEO of the defunct cryptocurrency exchange FTX stated in a tweet on Friday that he is willing to appear before Congress next week, but that he will be limited in what he can say and “won’t be as useful” as he would want.
This tweet was a response to many tweets from House Financial Services Committee Chair Maxine Waters earlier this month, in which she urged that Sam Bankman-Fried attend next week’s hearings regarding the collapse of FTX.
Waters, a Democrat from California, stated in a series of tweets to Bankman-Fried that it was “obvious to us that the information you have thus far is sufficient for testimony” based on various media interviews since the collapse of FTX.
FTX failed last month in what was basically a cryptocurrency counterpart of a bank run, when users attempted to withdraw their assets simultaneously due to mounting questions about the company’s financial viability and its linked trading arm, Alameda Research. Since its demise, the new management of FTX has described the cryptocurrency exchange’s administration as a “total failure of corporate controls.”
Bankman-Fried has acknowledged his own shortcomings in preventing the disaster.
Sam Bankman-Fried has claimed responsibility for the demise of FTX.
Bloomberg via Getty Images
In a series of tweets to Waters, Bankman-Fried identified particular problems he would be able to discuss with the committee, such as the viability of FTX’s US business, its American clients, and potential alternatives for restoring assets to overseas clients. He said that he could discuss what he believes caused the incident and “my own shortcomings.”
2) During the hearing, I will attempt to be helpful and provide whatever light I can on:
–FTX US’s financial solvency and American clients
–Pathways that could provide value to foreign users
What I believe caused the crash
–My own shortcomings
— SBF (@SBF FTX) December 9, 2022
Bankman-Fried has stated that he accepts responsibility for the demise of FTX and that he failed to comprehend the level of risk that Bermuda-based FTX and Alameda were undertaking across both firms. One of the allegations against Bankman-Fried is that he arranged for Alameda to use customer assets in FTX to place market bets. Bankman-Fried has stated in public interviews that he did not “knowingly” combine the assets of clients with those of Alameda.
Exchanges such as FTX are required to keep consumers’ deposits and market wagers separate. Other financial institutions have gotten into difficulties for mishandling customer deposits, including MF Global approximately ten years ago.
A little over a week ago, Bankman-Fried stated in a television appearance that he believed the US branch of FTX was completely solvent and could begin processing withdrawals immediately. Regarding the remainder of FTX, which was substantially larger than the US division, he stated that he had little control over the fate of clients’ assets.
After FTX’s bankruptcy, Bankman-Fried, who was once one of the wealthiest individuals in the world on paper, now believes he survives on a single credit card and likely has less than $100,000 to his name.
Waters stated that the collapse of FTX “harmed over one million individuals” and tweeted on Tuesday that a subpoena was “absolutely on the table” if Bankman-Fried refused to testify.
»Bankman-Fried consents to testify, but he “won’t be as helpful as I would like.”«