DELAWARE – After spending the past two weeks participating in media interviews, former FTX chief executive Sam Bankman-Fried is being more selective when it comes to appearing before Congress to discuss the collapse of his cryptocurrency empire.
He said on Monday during a Twitter Space interview that he is “currently not scheduled” to attend the Senate Banking Committee’s hearing on Wednesday, though he will testify at a separate hearing by a House panel a day earlier.
Senate Banking Committee lawmakers said in a statement later on Monday that Bankman-Fried declined to testify and called the decision “an unprecedented abdication of accountability”. His counsel has stated that “they are unwilling to accept service of a subpoena”, the statement said.
During the Twitter Space interview, the disgraced crypto mogul said he is “open and willing” to having a conversation with the chair of the Senate committee about the hearing if his attendance is deemed important. Bankman-Fried missed a deadline last week set by the Senate committee for a response to a request to testify.
Bankman-Fried, who is in the Bahamas, confirmed he will attend the Tuesday hearing by the House Financial Services Committee remotely. He is listed as a witness alongside current FTX CEO John J. Ray III, according to a media advisory from the committee. Starting at 10am in Washington, the House hearing will be split into two parts, each featuring one of the men.
Mr Ray, in remarks prepared for the House hearing, blamed FTX’s collapse on the failures of its previous leaders.
“The FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals,” Mr Ray said in written testimony released on Monday in advance of the hearing.
The prior management “failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets”.
It is not the first time that Mr Ray, who previously oversaw the liquidation of Enron, has had harsh words for his predecessors. He previously said he had never seen such a lack of corporate controls and trustworthy financial information.
According to his testimony, some of the unacceptable practices at FTX included the use of computer software that gave senior managers access to systems that stored customer assets without controls to prevent them from redirecting those assets, commingling of assets, the ability of FTX’s sister company Alameda Research to borrow funds for its own trading or investments, and the absence of audited financial statements.
The possible mishandling of customers’ funds and the flow of money between FTX and Alameda are at the centre of civil and criminal investigations into the once-prominent crypto exchange. Bankman-Fried has denied trying to perpetrate a fraud, though he has owned up to grievous managerial errors at FTX.
Mr Ray, in his prepared remarks, also said FTX went on a “spending binge” in late 2021 through 2022, during which about US$5 billion (S$6.8 billion) was spent on different businesses and investments – many of which may be worth a fraction of what was paid.
He said he and a team of outside consultants and experts are sifting through the company’s financial records to try to locate assets that can be used to repay customers and creditors. The scope of those efforts is “enormous”, he said.
“It involves detailed tracing of money flows and asset transfers from the time of FTX’s founding, and highly complex technological efforts to identify and trace crypto assets,” Mr Ray said.
“We are in the process of collecting and reviewing dozens of terabytes of documents and data, including records of billions of individual transactions, and we are leveraging sophisticated technology and expertise to identify and trace additional transactions and assets.” BLOOMBERG
