FTX’s fallen CEO, Sam Bankman-Fried, is scheduled to testify tomorrow as a witness before the U.S. House of Representatives Committee on Financial Services.
The committee is investigating the events that led up to FTX’s implosion, which resulted in the crypto exchange filing for bankruptcy last month. Prior to Bankman-Fried testifying, John J. Ray III, the new CEO of FTX, will speak to the House during its first panel.
The hearing, “Investigating the Collapse of FTX, Part I,” sounds like a movie title — and some parts of it probably feel like one, given how crazy this whole situation has become. But questions surrounding what really happened at FTX may remain unanswered; even though Bankman-Fried is scheduled to testify, there are still concerns he may get cold feet.
Last week, in a back-and-forth tweet exchange, California Representative Maxine Waters, the chairwoman of the House of Committee on Financial Services, invited Bankman-Fried to join the hearing on December 13. Bankman-Fried effectively declined.
That didn’t sit well with Waters, who noted that Bankman-Fried has been on a personal media tour, talking publicly to groups ranging from “Good Morning America” to the BBC.
Amid the possibility of a congressional subpoena to compel his attendance, Bankman-Fried tweeted back to Waters on December 9 that he is “willing to testify,” adding, “[T]here is a limit to what I will be able to say, and I won’t be as helpful as I’d like.” He claimed he does not have access to “much” of his data.
Although he skirted many questions from reporters, Bankman-Fried has still been rather chatty in recent weeks. Perhaps when he’s under oath before the U.S. government, it’ll be a different story.
Regardless, Bankman-Fried said in a tweet he will “try to be helpful” (after saying he won’t be as helpful as he’d like) and will talk about FTX US’ alleged solvency, resolutions to return value to users internationally, what he thinks led to the crash, and his “own failings.”
Last month, FTX bankruptcy hearings began in the U.S. Bankruptcy Court for the District of Delaware.
James Bromley, a partner at Sullivan & Cromwell and co-head of the firm’s global restructuring practice, said during the hearing FTX “laundered the world” in locations including Berkeley, California; Hong Kong; Miami; Chicago; and the Bahamas.
A few days before the initial bankruptcy hearing, in a November 17 filing with the same court, Ray, who was brought in to clean up the Enron scandal, said there was a “complete absence of trustworthy financial information.”
“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,” Ray said at the time.
Tomorrow’s hearing is the first of many with the House that aim to uncover what happened internally that caused one of the largest centralized crypto exchanges in the world to fall so hard and so fast.