The head of a House subcommittee in the United States has put pressure on both the previous and present CEOs of the defunct FTX cryptocurrency exchange, demanding that they provide documentation pertaining to the business’s financial dealings.
Raja Krishnamoorthi, Chairman of the Subcommittee on Economic and Consumer Policy, wrote in a letter dated November 18 that “FTX’s customers, former employees, and the public deserve answers.” The letter was addressed to both former FTX CEO Sam Bankman-Fried and the exchange’s current CEO John J. Ray III, who took over in the wake of FTX’s bankruptcy filings. Krishnamoorthi’s letter was addressed to both Bankman-Fried and Ray III.
In addition, Krishnamoorthi said that the subcommittee was “seeking specific information on the considerable liquidity challenges encountered by FTX, the company’s unexpected decision to declare bankruptcy, and the possible effect that these actions might have on consumers who utilised your exchange.”
He asked that the exchange give over a large amount of material pertaining to its finances, including explanations on its liquidity concerns, balance sheets from before its collapse in early November, its current crypto holdings, and a strategy on how it would compensate consumers.
In addition, Krishnamoorthi asked for details regarding who was responsible for managing the financial aspects of the exchange, any input that FTX had received from Alameda Research CEO Caroline Ellison, and a description of any “backdoor” that may have been used to move funds in secret from auditors or other FTX departments.
A request was sent to Bankman-Fried on August 30 asking for information on the efforts that FTX is doing to prevent fraud and scams. A reminder was sent to the current and past leaders of FTX to provide the necessary paperwork as part of this request.
The crypto exchanges Binance US, Coinbase, Kraken, and KuCoin all received letters that were quite similar to this one.
The subcommittee gave FTX until December 1 to collect the necessary documentation in order to assist it in determining “what went wrong at FTX” and what actions Congress could take to ensure that the crypto industry “is appropriately regulated and investors are protected.” The subcommittee has set a deadline of December 1.
The deadline for the subcommittee coincides with an announcement made on November 16 by members of the United States House Financial Services Committee that they will hold a hearing in December to investigate the failure of FTX and the “broader consequences for the digital asset ecosystem.” The hearing is scheduled to take place in December.
The letter written by Krishnamoorthi follows similar demands that were laid out on November 16 by Senators Elizabeth Warren and Richard Durbin. The senators wrote to Bankman-Fried and Ray asking for a similar mass of documents related to the collapse of FTX. Krishnamoorthi’s letter follows in their footsteps.