US House Financial Services Committee on Tuesday held a hearing on FTX collapse following the arrest of Sam Bankman-Fried, the founder and ex-CEO of the crypto exchange.
Bankman-Fried, the once-billionaire called the “next Warren Buffet,” was arrested in the Bahamas, based on the US regulators’ charges, without letting him appear before the House Financial Services Committee to testify.
The indictment in the US based on which Bankman-Fried was arrested was unsealed after the FTX hearing began.
Charges against Bankman-Fried
The US Attorney’s Office brought eight criminal charges against the FTX founder who took the company to $30 billion net worth.
The charges are:-
- Conspiracy for committing wire and securities fraud
- Individual charges of wire fraud and securities fraud
- Money laundering
- Conspiracy for avoiding campaign finance regulations
Rep. Wagner: Can you elaborate in ways FTX is worse than Enron?
FTX CEO Ray: “…This one is unusual in the sense that literally there is no recordkeeping whatsoever.” pic.twitter.com/kMSW7ioQZG
— Yahoo Finance (@YahooFinance) December 13, 2022
The Blistering FTX hearing
The new CEO of FTX, John J. Ray, the sole witness of the US House panel, was questioned for hours on the FTX hearing Tuesday. Ray called Bankman-Fried, an inexperienced person, and said he doesn’t trust any of the company’s papers.
“There’s no record-keeping whatsoever,” said the new CEO. He told the House panel that FTX collapse resulted from poor financial controls and bad decisions of months, if not years, and it didn’t occur overnight or over a week.
The present FTX CEO compared the crypto exchange platform’s situation with Enron’s and said it’s even worse than he had seen in Enron two decades ago. One of the biggest corporate industry frauds in American history occurred in Enron.
What Made the House Laugh?
While elaborating on his statement, Ray started talking about record-keeping, which sparked laughter inside the room. Employees of the company used Quickbooks, a bookkeeping software, to track the portfolio of a multi-billion dollar firm, told Ray.
Ray alleged that Bankman-Fried and his company just took customers’ money to use for personal purposes, which he called an “old fashioned embezzlement.” They might have done it this way to hide things, added FTX CEO.
Ray also said 1,500 Bahamians were allowed to withdraw $100 million just before FTX declared bankruptcy. Bankman-Fried was lying that the company had enough funds to cover the holdings of all the clients, added Ray.
What Caused the Hearing?
The FTX hearing followed the arrest of Sam Bankman-Fried, who allegedly moved billions from FTX customers’ funds to his other firm and announced bankruptcy.
