Senators slam Sam Bankman-Fried for refusing to testify before banking panel on FTX collapse

In a letter released prior to former FTX CEO Sam Bankman-Fried’s arrest by authorities in the Bahamas on Monday in connection with pending charges in the U.S., the bipartisan leaders of the Senate Banking Committee put out a statement blasting him for refusing to testify at a hearing on the implosion of the cryptocurrency exchange he founded.

Chairman Sherrod Brown (D-Ohio) and Ranking Member Pat Toomey (R-Pa.) said they offered Bankman-Fried the opportunity to testify at a hearing on FTX’s collapse that’s scheduled for Wednesday, December 14th at 10 a.m. EST or next week on December 20th. They were also willing to allow him to appear remotely given that he is still in the Bahamas, where FTX is headquartered. 

The senators wrote, “We have offered Sam Bankman-Fried two different dates for providing testimony before the Senate Banking, Housing, and Urban Affairs Committee, and are willing to accommodate virtual testimony. He has declined in an unprecedented abdication of accountability.”

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Sam Bankman-Fried, founder and former CEO of FTX Cryptocurrency Derivatives Exchange, during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, US, on Wednesday, Aug 17, 2022. (Photographer: Jeenah Moon/Bloomberg via Getty Images / Getty Images)

The bipartisan duo noted, “Virtually every CEO, financial regulator, and administration official for Republicans and Democrats has agreed to testify in front of both the Senate and House when called upon – that is how congressional oversight works.”

Brown and Toomey said they will continue to work to secure Bankman-Fried’s appearance before the committee despite his lawyers declining a subpoena for his testimony: “Given that Bankman-Fried’s counsel has stated they are unwilling to accept service of a subpoena, we will continue to work to have him appear before the Committee. He owes the American people an explanation.”

Prior to his arrest, Bankman-Fried spoke publicly on Monday in a Twitter Spaces panel hosted by Unusual Whales and indicated he wasn’t planning to attend the Senate hearing because it was “duplicative” given his plans to testify before the House Financial Services Committee on Tuesday. He said that he is “quite overbooked” but that he is “open and willing to have a conversation if they feel it’s important I attend.”

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House Financial Services Chair Maxine Waters (D-Calif.) said on Friday said she wants FTX founder Sam Bankman-Fried to testify at the panel’s Dec. 13 hearing on the cryptocurrency collapse (Getty Images / Getty Images)

Brown and Toomey previously indicated they were prepared to issue a subpoena for Bankman-Fried’s testimony if he failed to respond to the committee’s invitation by a deadline and declined to appear at the hearing. In their letter requesting his testimony, the senators wrote, “There are still significant unanswered questions about client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover-up.” 

The Senate Banking Committee’s hearing on the collapse of FTX is scheduled to go ahead Wednesday at 10 a.m. EST.

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Sam Bankman-Fried, co-founder and former CEO of FTX, in Hong Kong, China, on Tuesday, May 11, 2021. (Photographer: Lam Yik/Bloomberg via Getty Images / Getty Images)

Entitled, “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers”, the Senate hearing will feature testimony from investor and “Shark Tank” panelist Kevin O’Leary, who invested nearly $15 million in FTX; in addition to Professor Hilary Allen of American University College of Law; Jennifer Shulp, Director of Financial Regulation Studies at the libertarian Cato Institute’s Center for Monetary and Financial Alternatives; and actor Ben McKenzie Shenkkan.

Bankman-Fried was expected to appear remotely before the House Financial Services Committee at 10 a.m. EST on Tuesday, but his attendance is in doubt following his arrest in the Bahamas and likely extradition to the U.S. to face charges. 

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The House committee’s hearing will begin with testimony from current FTX CEO John J. Ray III, a corporate restructuring expert who handled the fallout from Enron’s implosion. 

Ray noted in FTX’s filings in bankruptcy court that it was clear that control of the crypto firm was concentrated “in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals” due to the “complete failure of corporate controls.”