The downfall of crypto trading platform FTX has triggered a worldwide regulatory investigation, and now the U.S. House Financial Services Committee is undertaking a bipartisan hearing on the matter in December.
The committee will focus on the once-heralded exchange’s collapse and the broader consequences of FTX’s failure for the digital asset ecosystem, according to a Wednesday (Nov. 16) press release.
A spokesperson for FTX did not immediately return PYMNTS’ request for comment.
Former FTX CEO Sam Bankman-Fried (SBF) will be coming to the U.S. for questioning, as the committee expects to hear from the companies and individuals involved, including officers from Alameda Research, Binance and FTX’s around 130 affiliates, among other related entities, the release stated.
With the help of a marquee investor roster, SBF was able to build FTX into a massively popular exchange, once valued at $32 billion, and successfully promote himself as one of the most trusted founders in all of crypto.
In the end, it took days for that all to come crashing down, providing a dramatic example of what can happen when visionary founders are given the reins to other people’s money with few strings attached.
FTX filed for bankruptcy last week following revelations that it had used customer money to shore up its sister company, Alameda Research.
Soon after, Changpeng Zhao, founder and CEO of Binance, began to unload his almost $2 billion equity stake in FTX held chiefly through FTT, the FTX token.
This led to a liquidity crisis for FTX. Zhao had initially shown interest in acquiring his rival company but walked away from the deal following two days of due diligence. A run on FTX ensued, crashing the price of FTT by 72%.
The rapid collapse of FTX has posed tremendous harm to over 1 million users, many of them everyday U.S. citizens.
“As chairwoman of the Financial Services Committee, I have led the effort in examining and investigating the digital assets marketplace and know that we need legislative action to ensure that digital assets entities cannot operate in the shadows outside of robust federal oversight and clear rules of the road,” said Rep. Maxine Waters in the Wednesday release.
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