Following collapse of crypto scam venture FTX, its boss Sam Bankman-Fried, who had donated hundreds of millions of dollars to Democratic Party leaders and several heavyweight figures in the US Capitol thought he would remain above the law and there would be no legal action against him. But now, prosecutors are looking at whether the former exchange CEO manipulated the market for Terra, a crypto that collapsed this year, according to a report.
According to Reuters report, House Financial Services Committee Chairwoman Maxine Waters told Reuters on Thursday that she is prepared to subpoena FTX founder Sam Bankman-Fried if he does not agree to appear before the panel next week and she is working out the best way to do it.
“We’ve made it clear that we want Sam at our hearing on December 13. If he does not cooperate, then we are prepared to subpoena”, Waters said in an interview in the US Capitol.
Regulators around the globe, including in the Bahamas, where FTX is based, and in the United States, are investigating the role of FTX’s top executives including Bankman-Fried in the firm’s stunning collapse, Reuters has previously reported. The crypto exchange filed for bankruptcy last month after a liquidity crisis that saw at least US$1 billion of customer funds vanish.
Prosecutors and regulators have not charged Bankman-Fried with any crime.
Bankman-Fried missed a Thursday evening deadline to respond to a Senate Banking Committee request to testify at a hearing, raising the possibility of a subpoena, Axios reported.
Waters said she has the authority to issue a subpoena herself but could put it to a committee vote, adding she would first work out the procedure with Representative Patrick McHenry, the Republican lawmaker who will chair the panel when his party assumes control of the House in January.
She said no decision has been made so far. “I could really do it myself. We’d probably do a vote,” she said. “I have to work it out with Mr. McHenry how we do it. But we will issue a subpoena”.
“Either he participates or not. And that’s when we make our decision”, Waters said. “It’s only proper and right, and makes good sense, to say we want you here”.
Securities & Exchange Commission Chair Gary Gensler suggested Wednesday in an exclusive interview with Yahoo Finance Live failed crypto exchange FTX violated securities laws by using customer assets to trade at its affiliated hedge fund, Alameda Research.
“I can’t speak to any one case or any one situation, but our securities laws say that you need to properly segregate customer funds”, Gensler said.
“You also shouldn’t be running a broker dealer or a hedge fund, and an exchange. The New York Stock Exchange doesn’t also have a hedge fund on the side and trade against their customers”.
Gensler said some crypto platforms have asked the SEC to continue the ability to lend, trade, and operate an exchange and a hedge fund under one company, something the agency won’t allow, as is custom under traditional securities laws.
“We have said, no, you have to separate it out”, Gensler said. “Some have come in and said: can we have a lighter touch regulation? We’ve said, no”.
‘The basic message that I have had is the same public message as private message”, said Gensler. “Come into compliance. Your field will not last long outside of public policy norms”.
