By KEN SWEET (AP Business Writer)
NEW YORK (AP) — The House Financial Services Committee plans to hold a hearing into the collapse of crypto exchange FTX on Tuesday, but its star witness will be absent.
Sam Bankman-Fried was scheduled to testify before the House Financial Services Committee, alongside the company’s current CEO, John Ray III. However, Bankman-Fried was arrested in the Bahamas on Monday evening and US authorities said they planned to unseale him on Tuesday.
FTX filed for bankruptcy on November 11, when the company ran out of money after the cryptocurrency equivalent of a bank run. The collapse of the second-largest crypto exchange has drawn worldwide attention, and Bankman-Fried is now facing charges from US authorities and likely Bahamian authorities as well.
Rep. Maxine Waters, D-Calif. and chair of the Financial Services Committee, said while she understands Bankman-Fried must be held accountable, she is “disappointed” the arrest took place before he could testify.
“While Mr. Bankman-Fried should be held accountable, the American public deserves to hear directly from Mr. Bankman-Fried about the actions that injured more than a million people and wiped out the hard-earned savings of so many, ,” Waters said in a statement late Monday.
Bankman-Fried rose to prominence in Washington and donated millions of dollars to mostly left-wing political causes and Democratic political campaigns, and was hailed as the new face of the crypto industry. He previously testified in favor of certain bills that would regulate the crypto industry in a way that favors FTX.
A handful of Financial Services Committee members have previously received political donations from FTX or Bankman-Fried, including Rep. Josh Gottheimer, DN.J. and Rep. Ritchie Torres, DN.Y.
Bankman-Fried more or less stayed at his luxury Bahamas resort in Nassau.
This will be Ray’s first public appearance since the collapse of FTX. Before FTX, the restructuring expert was best known for having to clean up the mess at Enron about 20 years ago. Ray testified in court that FTX’s financial terms were worse than Enron’s and that he had no confidence in FTX’s accounting before taking over the company.
“The collapse of the FTX Group appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who have implemented virtually none of the systems or controls necessary for a business that is given control of other people’s money or assets,” Ray said in his prepared remarks for Tuesday’s hearing.