A House committee announced a hearing to investigate the collapse of the crypto exchange FTX that will feature the company’s beleaguered founder, Sam Bankman-Fried.
The House Financial Services Committee announced that it would hold a hearing in December to probe the cryptocurrency company’s descent into bankruptcy. The committee expects to hear from the companies and people involved, including Bankman-Fried, Alameda Research, Binance, FTX, and others.
“The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds. Unfortunately, this event is just one out of many examples of cryptocurrency platforms that have collapsed just this past year,” said Chairwoman Maxine Waters (D-CA).
TOM BRADY, STEPH CURRY, AND OTHER STARS FACE CLASS-ACTION SUIT ALONGSIDE FTX FOUNDER
A firm date for the hearing, which will be a much-watched event, has not yet been released, although it will come during a lame-duck session of Congress while Democrats still control the gavel, just weeks before Republicans are expected to take control of the chamber.
“Oversight is one of Congress’ most critical functions and we must get to the bottom of this for FTX’s customers and the American people,” said ranking member Patrick McHenry (R-NC). “It’s essential that we hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system.”
News about the investigation comes as FTX and Bankman-Fried face a growing backlash for the company’s dramatic collapse. The company filed for bankruptcy on Friday and announced that Bankman-Fried was stepping down as CEO.
This week, an Oklahoma resident filed a class-action lawsuit against Bankman-Fried and several celebrities, such as Tom Brady, who were involved in promoting the FTX platform and taking advantage of what the lawsuit called “unsophisticated investors.”
“The Deceptive and failed FTX Platform was based upon false representations and deceptive conduct,” the suit reads.
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Prior to his fall from grace, Bankman-Fried was vaunted as a brilliant innovator and even compared to billionaire investor Warren Buffett. The FTX founder was the second-largest Democratic donor during the midterm election cycle. Following the company’s collapse, the vast majority of Bankman-Fried’s net worth came crashing down in just a matter of days.
The FTX contagion has caused bitcoin and other cryptocurrencies to plunge to two-year lows and has rattled the crypto ecosystem in a major way. Bitcoin has fallen more than 20% since earlier this month as investors panicked and sold their cryptocurrency investments.
