Senate panel threatens to subpoena Bankman-Fried for FTX hearing testimony

The top Democrat and Republican on the Senate Banking Committee have threatened to subpoena FTX CEO Sam Bankman-Fried if he doesn’t agree to testify during a hearing on the cryptocurrency firm’s collapse scheduled for next week.

In a Wednesday letter, Senate Banking Committee Chairman Sherrod Brown (D-Ohio) warned Bankman-Fried that he may be forced to testify before the panel if he does not cooperate with a request to appear at a Dec. 14 hearing.

“FTX’s collapse has caused real financial harm to consumers, and effects have spilled over into other parts of the crypto industry. The American people need answers about Sam Bankman-Fried’s misconduct at FTX,” said Brown and Sen. Pat Toomey (Pa.), the panel’s ranking Republican, in a statement.

“The Committee has requested that he testify at our upcoming hearing on FTX’s collapse, and will consider further action if he does not comply,” the lawmakers noted.

Bankman-Fried is the founder and former CEO of FTX, which was one of the world’s largest cryptocurrency exchanges and trading platforms until its collapse last month. He also founded and was the principal owner of Alameda Research, an investment firm that went bankrupt along with FTX and most of its affiliates. 

As FTX spiraled into bankruptcy last month, customers attempted to withdraw billions of dollars in deposits stored on the platform over a three-day span. While the firm was once valued as high as $32 billion, FTX lacked enough cash to compensate its customers and filed for bankruptcy soon after.

Bankman-Fried has insisted he did not mean to harm his customers and is attempting to make them whole, but has also admitted to several serious missteps. He said FTX leaders lacked basic information about how much debt the company owed its customers and various creditors, along with how much money the company actually had stored away.

He also said FTX used money held by customers on its exchange to fund Alameda’s investments even though FTX promised users it would not use customer money for such purposes. 

“You must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors. There are still significant unanswered questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up,” Brown wrote in the letter to Bankman-Fried and his attorney, Mark S. Cohen of the law firm Cohen & Gresser.

“If you chose not to appear, I am prepared, along with Ranking Member Pat Toomey, to issue a subpoena to compel your testimony,” he wrote.

Bankman-Fried has also resisted testifying before the House Financial Services Committee, which is set to hold its own hearing on the FTX collapse Dec. 13. 

Chairwoman Maxine Waters (D-Calif.) and ranking member Patrick McHenry (R-N.C.) have urged Bankman-Fried on Twitter to also appear before their committee, but have also been unsuccessful.

“Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain. I’m not sure that will happen by the 13th. But when it does, I will testify,” Bankman-Fried tweeted Friday.