December 4, 2022

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FTX leadership pressed for information by US subcommittee chairman

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FTX leadership pressed for information by US subcommittee chairman

“FTX’s customers, former employees, and the public deserve answers,” Raja Krishnamoorthi, Chairman of the Subcommittee on Economic and Consumer Policy wrote in a Nov. 18 letter 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 added the subcommittee was “seeking detailed information on the significant liquidity issues faced by FTX, the company’s abrupt decision to declare bankruptcy, and the potential impact of these actions on customers who used your exchange.”

He insisted the exchange hand over a slew of information relating to its finances, including explainers on its liquidity issues, balance sheets from before its collapse in early November, its current crypto holdings, and a plan on how it will repay customers.

Krishnamoorthi also requested information regarding who maintained the exchange’s finances, any input FTX received from Alameda Research CEO Caroline Ellison, and a description of any “backdoor” that may have been used to move funds under the nose of auditors or other FTX departments.

The former and current FTX bosses were reminded to submit documentation as part of an Aug. 30 request to Bankman-Fried asking for information regarding the steps FTX is taking to combat fraud and scams.

Similar letters were sent to the crypto exchanges Binance.US, Coinbase, Kraken, and KuCoin.

The subcommittee set a deadline of Dec. 1 for FTX to procure the requested documentation to help it determine “what went wrong at FTX” and what steps Congress could enact to ensure the crypto industry “is appropriately regulated and investors are protected.”

Related: CFTC Commissioner Mersinger says the time has come for action on crypto regulation

The subcommittee’s deadline coincides with a Nov. 16 announcement of a scheduled December hearing by members of the U.S. House Financial Services Committee that will explore the collapse of FTX and the “broader consequences for the digital asset ecosystem.”

Krishnamoorthi’s letter follows similar demands laid out on Nov. 16 by Senators Elizabeth Warren and Richard Durbin who wrote to Bankman-Fried and Ray asking for a similar mass of documents related to the collapse of FTX.

The former and current CEOs of the bankrupt FTX cryptocurrency exchange have been pressed by the chair of a United States House subcommittee calling for documents relating to the exchange’s finances.