Head of US panel questions the FTX management for information

    Pathik Bhattacharya
    Pathik Bhattacharya
    Published on November 19, 2022 6:34 PM

    Updated on January 25, 2023 5:45 PM

    The former and current CEOs of FTX were ordered to provide information on the exchange's past and present financials in a letter from the chair of the Subcommittee on Economic and Consumer Policy.
    Head of US panel questions the FTX management for information
    Source: CNBC

    As a result of the FTX bankruptcy, Washington intensifies pressure on cryptocurrency "darling" Sam Bankman-Fried

    As an industry lobbyist who has been frequent on Capitol Hill for the past year, Bankman-Fried tweeted his regrets on Thursday. He admitted, "I f—-ed up and should have done better."

    The company revealed on Friday that he had resigned as CEO of the cryptocurrency exchange he established and that FTX had applied for Chapter 11 bankruptcy protection.

    The Biden White House and two influential Democratic committee chairs have openly criticized FTX and demanded greater regulation of the more significant industry due to the company's collapse.

    Sam is under pressure to release FTX's financial records.

    The chair of a U.S. House subcommittee has pressured the former and present CEOs of the defunct FTX bitcoin exchange for financial records about the firm.

    In a letter dated November 18 and addressed to both former FTX CEO Sam Bankman-Fried and the exchange's present CEO John J. Ray III, who took over following FTX's bankruptcy filings, Raja Krishnamoorthi, chairman of the Subcommittee on Economic and Consumer Policy, stated that "FTX's customers, former employees, and the public deserve answers."

    The subcommittee was, according to Krishnamoorthi, looking for "specific information on the considerable liquidity challenges encountered by FTX, the company's unexpected decision to declare bankruptcy, and the potential impact of these actions on clients who used your exchange."

    Krishnamoorthi also asked for details about who was in charge of the exchange's finances, what advice Alameda Research CEO Caroline Ellison may have given FTX and a description of any "backdoor" that might have been utilized to transfer money out of sight of auditors or other FTX departments.

    He demanded :

    • The exchange turned over a tonne of financial documents,
    • Explanations of its liquidity problems
    • Balance sheets from before its early November collapse
    • Its current crypto holdings 
    • A strategy for paying back customers.

    FTX measures to find "what went wrong at FTX" 

    The request to Bankman-Fried on August 30 for information outlining the measures FTX is taking to prevent fraud and scams included a reminder to the former and current FTX executives to submit supporting evidence.

    To assist it in determining "what went wrong at FTX" and what measures Congress could take to guarantee the crypto business "is suitably regulated and investors are safeguarded," the subcommittee gave FTX until December 1 to obtain the necessary evidence.

    The deadline set by the subcommittee is for December

    The deadline set by the subcommittee is in line with a hearing that members of the U.S. House Financial Services Committee have scheduled for December to discuss the demise of FTX and its "broader repercussions for the digital asset ecosystem."

    Related: FTX Crash Pulls Down The Whole Crypto Market, Records Lowest in the Year

    Krishnamoorthi's request is identical to those made in a letter to Bankman-Fried and Ray on November 16 by Senators Elizabeth Warren and Richard Durbin. They asked for a similar quantity of papers relating to the demise of FTX.