Sam Bankman-Fried to testify to Congress over FTX failure

FTX founder Sam Bankman-Fried will testify next week at a US congressional hearing on the collapse of his crypto group, in a U-turn that will mark his first public contact with US officials about the events surrounding its bankruptcy.

Maxine Waters, chair of the US House committee on financial services, on Friday announced Bankman-Fried’s participation in the first hearing on the topic scheduled for December 13. Just hours before the entrepreneur said he was “willing to testify”.

The panel is investigating the collapse of FTX as lawmakers try to piece together how Bankman-Fried’s once-$32bn crypto empire imploded, leaving potentially millions of creditors including retail investors with losses.

The 30-year-old has been on a media blitz since FTX filed for bankruptcy last month, providing interviews to numerous outlets against the advice of his lawyers in an apparent attempt to explain his role and understanding of the events leading to its collapse, but he has expressed reluctance to speak to Congress.

Now he has bowed to pressure after Waters made it clear a subpoena was on the table if he refused, and implored him to speak to “help the company’s customers, investors and others”.

In a series of Twitter posts on Friday, Bankman-Fried said he would be willing to testify. “I still do not have access to much of my data — professional or personal. So there is a limit to what I will be able to say, and I won’t be as helpful as I’d like,” he added.

John J Ray, who took over as chief executive of the now defunct exchange and is running its bankruptcy proceedings, is also scheduled as a witness in a separate panel.

The rapid collapse of Bankman-Fried’s crypto empire has sent shockwaves through the digital assets industry, triggering multiple investigations worldwide, with dozens of authorities seeking to understand how FTX and its related trading shop Alameda Research operated and failed. A string of other crypto companies including broker Genesis and lender BlockFi have also encountered stress because of links with FTX.

Bankman-Fried, who has remained in the Bahamas since FTX collapsed, said he would “try to be helpful during the hearing” and shed light on issues including “what I think led to the crash”, “my own failings” and “pathways that could return value to users internationally”.

He has repeatedly denied knowingly misusing customer funds and committing fraud, but has admitted to a lack of basic risk management and losing track of the cosy relationship between FTX and Alameda.

“I had thought of myself as a model CEO, who wouldn’t become lazy or disconnected,” he said on Friday. “Hopefully people can learn from the difference between who I was and who I could have been.”

US lawmakers are increasing their scrutiny of the crypto industry. On Thursday, the US Securities and Exchange Commission told US-listed companies to disclose any impact from the “widespread disruption” in crypto markets. The regulator added public companies should aim to provide investors with “specific, tailored disclosure” around how market events including bankruptcies had affected their businesses.

Meanwhile, Changpeng “CZ” Zhao, chief executive of crypto exchange Binance, continued his online criticism of his former rival. When FTX first encountered difficulties last month, Zhao initially offered to buy some or all of the platform. That deal would probably have represented a rescue deal, but it quickly unravelled.

Binance was also an early investor in FTX and exited the investment last year. Zhao on Friday said that decision was met with an “unhinged” response from Bankman-Fried.

“He launched a series of offensive tirades at multiple Binance team members, including threatening to go to ‘extraordinary lengths to make us pay’,” Zhao wrote on Twitter.

“You won,” Bankman-Fried responded. “None of this is necessary. You won. Why are you lying about this now?”

Additional reporting by Stefania Palma in Washington