The House Financial Services Committee held a hearing Tuesday on the collapse of cryptocurrency exchange FTX following the Monday night arrest of founder Sam Bankman-Fried within the Bahamas as U.S. regulators released a slew of civil and criminal charges against the one-time billionaire.
The Justice Department and Bahamian authorities said Bankman-Fried, who was previously scheduled to testify before the panel, was arrested based on an indictment within the U.S. that was unsealed shortly after the hearing began.
The U.S. Attorneys Office for the Southern District of Recent York charged the disgraced crypto executive with eight criminal counts: conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to avoid campaign finance regulations.
John J. Ray, the corporate’s latest CEO and the panel’s sole witness, told lawmakers the corporate had “no record-keeping in any way,” using bookkeeping software QuickBooks to trace its multibillion dollar portfolio.
“This is actually just quaint embezzlement. That is just taking money from customers and using it for your personal purpose. Not sophisticated in any respect,” Ray said in blistering testimony that lasted greater than 4 hours. “Sophisticated, perhaps in the way in which they’re hiding something, frankly, right in front of their eyes. That is just plain old embezzlement. Old fashioned, old skool.”
The corporate imploded and filed for Chapter 11 bankruptcy last month after reportedly transferring billions of dollars in FTX customer funds to Bankman-Fried’s hedge fund, Alameda Research.
The Securities and Exchange Commission also charged the previous crypto “darling” Tuesday morning with allegedly “orchestrating a scheme to defraud equity investors in FTX Trading,” based on the agency.
The Senate Banking Committee had also asked Bankman-Fried to testify at a Wednesday hearing that he previously refused to attend.
Prior to his company’s implosion, Bankman-Fried donated almost $40 million to candidates, campaigns and political motion committees within the 2022 congressional midterm elections, with most of his publicly disclosed contributions going toward Democrats. Ryan Salame, the co-CEO of FTX Digital Markets, donated one other $23 million, with the vast majority of his contributions heading toward Republicans.
