Sebastian Sinclair

Former FTX CEO Sam Bankman-Fried won’t appear before Congress on Tuesday after all, considering his arrest, disappointing the head of the House Financial Services Committee and piquing curiosities across crypto.



Committee chair Maxine Waters said Monday she was “surprised” to hear Bankman-Fried had been apprehended. Bahamian authorities <a href="https://blockworks.co/news/sam-bankman-fried-arrested-in-bahamas" target="_blank" rel="noreferrer noopener">arrested</a> the former crypto billionaire on sealed charges at the request of the US Attorney for the Southern District of New York at 6:00 pm local time on Monday.&nbsp;



Bankman-Fried is to be held in custody in line with the Bahamas Extradition Act.



“It’s about time the process to bring [Bankman-Fried] to justice has begun,” Waters said in a <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=410026" target="_blank" rel="noreferrer noopener">statement</a>. “However, as the public knows, my staff and I have been working diligently for the past month to secure [Bankman-Fried’s] testimony before our Committee tomorrow morning.”



Bankman-Fried’s absence will only extend the wait for on-the-record, public answers about his involvement in the fall of his own crypto empire. While he must be held accountable for his actions, the American public deserves to hear directly from the former CEO, Waters said.&nbsp;



Lawyers estimate up to one million FTX creditors around the world are impacted by its bankruptcy, although how many are US-based is unclear. 



<h3>Waters threatened Bankman-Fried with subpoena to front Congress </h3>



Earlier this month, Waters <a href="https://twitter.com/RepMaxineWaters/status/1598693811252875264?s=20&amp;t=XUUyvVwCThzZeidVGXr0Gg" target="_blank" rel="noreferrer noopener">encouraged</a> Bankman-Fried to testify before a Financial Services committee.



“We appreciate that you&#8217;ve been candid in your discussions about what happened at FTX,” Waters tweeted. “Your willingness to talk to the public will help the company&#8217;s customers, investors and others.”



Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1599511560384225281?s=20&amp;t=GD5CadogYcSt7WTxWuW-IA" target="_blank" rel="noreferrer noopener">responded to Waters’</a> request two days later, where he said he’d testify once learning exactly what happened with FTX, but was uncertain if he’d be ready in time for the hearing.



Following <a href="https://www.cnbc.com/2022/12/07/ftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">criticism</a> for not outright serving Bankman-Fried a subpoena to testify, the US representative for California&#8217;s 43rd congressional district <a href="https://blockworks.co/news/maxine-waters-subpoena-sam-bankman-fried" target="_blank" rel="noreferrer noopener">shot back</a>, claiming one was “<a href="https://twitter.com/RepMaxineWaters/status/1600643111973261312?s=20&amp;t=XUUyvVwCThzZeidVGXr0Gg" target="_blank" rel="noreferrer noopener">definitely on the table</a>.”&nbsp;



Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1601186246990401537" target="_blank" rel="noreferrer noopener">later</a> acquiesced, claiming he would appear virtually on Tuesday. &#8220;&#8230; As the committee still thinks it would be useful, I am willing to testify on the 13th,&#8221; he tweeted.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Lies are circulating <a href="https://twitter.com/CNBC?ref_src=twsrc%5Etfw">@CNBC</a> that I am not willing to subpoena <a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a>. He has been requested to testify at the December 13th hearing. A subpoena is definitely on the table. Stay tuned.&mdash; Maxine Waters (@RepMaxineWaters) <a href="https://twitter.com/RepMaxineWaters/status/1600643111973261312?ref_src=twsrc%5Etfw">December 8, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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But the timing of his arrest — on the day before his supposed appearance before Congress — has industry watchers (and <a href="https://twitter.com/riggedgov/status/1602454804814434305?s=20&amp;t=1S74M4GmpwBisVpuXzGc_Q" target="_blank" rel="noreferrer noopener">social</a> <a href="https://twitter.com/cvpayne/status/1602449060631396352?s=20&amp;t=1S74M4GmpwBisVpuXzGc_Q" target="_blank" rel="noreferrer noopener">media</a>) wondering whether <a href="https://twitter.com/milesdeutscher/status/1602450896020918272?s=20&amp;t=1S74M4GmpwBisVpuXzGc_Q" target="_blank" rel="noreferrer noopener">coincidence</a> or coordination is to blame. 



“An arrest has always been suspected,” Sheila Warren, CEO of the Crypto Council for Innovation told Blockworks in a statement. “What’s interesting is the timing — right before two Congressional hearings.”&nbsp;&nbsp;



The speed at which authorities filed charges against Bankman-Fried, however, likely indicates regulators had received information from cooperating witnesses, the <a href="https://www.nytimes.com/2022/12/12/business/ftx-sam-bankman-fried-bahamas.html" target="_blank" rel="noreferrer noopener">New York Times</a> reported Monday citing sources familiar with the matter.



The SEC separately <a href="https://blockworks.co/news/sec-charges-sam-bankman-fried-with-defrauding-investors" target="_blank" rel="noreferrer noopener">charged</a> Bankman-Fried with defrauding FTX&#8217;s equity investors on Tuesday, of which around 80 were based in the US. Tuesday on Tuesday. They together contributed more than $1.1 billion to Bankman-Fried ventures, the SEC said, representing about 60% of all funds he&#8217;d raised.



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Bankman-Fried Arrest Day Before Congress Testimony Raises Eyebrows

Bessie Liu

Maxine Waters, chair of the House Financial Services Committee, tweeted on Thursday that plans to subpoena fallen crypto celebrity Sam Bankman-Fried to testify at the FTX hearing on Dec. 13 are still very much on the table.&nbsp;



CNBC first <a href="https://www.cnbc.com/2022/12/07/ftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">reported</a> that Waters had been trying to convince Bankman-Fried to testify voluntarily and did not have plans to subpoena him, claims Waters denied.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Lies are circulating <a href="https://twitter.com/CNBC?ref_src=twsrc%5Etfw">@CNBC</a> that I am not willing to subpoena <a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a>. He has been requested to testify at the December 13th hearing. A subpoena is definitely on the table. Stay tuned.&mdash; Maxine Waters (@RepMaxineWaters) <a href="https://twitter.com/RepMaxineWaters/status/1600643111973261312?ref_src=twsrc%5Etfw">December 8, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The representative of California&#8217;s 43rd District in Congress previously <a href="https://twitter.com/RepMaxineWaters/status/1598693811252875264?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1599511560384225281%7Ctwgr%5Ed5ecf0c111da7a38f395f195ad6cc9fd81c08585%7Ctwcon%5Es3_&amp;ref_url=https%3A%2F%2Fwww.cnbc.com%2F2022%2F12%2F07%2Fftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">tweeted</a> at the fallen crypto celebrity, politely inviting him to participate at the hearing. In response, Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1599511560384225281?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1599511560384225281%7Ctwgr%5Ed5ecf0c111da7a38f395f195ad6cc9fd81c08585%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.cnbc.com%2F2022%2F12%2F07%2Fftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">said</a>, “Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain.”



Adding, “I’m not sure that will happen by the 13th. But when it does, I will testify.”



Waters’ gentle approach to Bankman-Fried, was criticized by crypto community members, and many were concerned about his cushy relationship with elected officials through previous <a href="https://blockworks.co/news/ftx-donations-campaign-finance" target="_blank" rel="noreferrer noopener">campaign donations</a>.



Her <a href="https://twitter.com/RepMaxineWaters/status/1599858166359068676" target="_blank" rel="noreferrer noopener">subsequent</a> pleas, which took a dig at the former FTX CEO’s recent media tour, were initially left unanswered by Bankman-Fried.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">.<a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a>, Based on your role as CEO and your media interviews over the past few weeks, it’s clear to us that the information you have thus far is sufficient for testimony. (1/3) <a href="https://t.co/YUVVjOkC40">https://t.co/YUVVjOkC40</a>&mdash; Maxine Waters (@RepMaxineWaters) <a href="https://twitter.com/RepMaxineWaters/status/1599858166359068676?ref_src=twsrc%5Etfw">December 5, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Under <a href="https://www.govinfo.gov/content/pkg/USCODE-2020-title28/pdf/USCODE-2020-title28-partV-chap117-sec1783.pdf#:~:text=%C2%A7%201783-,%C2%A7%201783,of%20person%20in%20foreign%20country&amp;text=The%20person%20serving%20the%20subpoena,the%20issuance%20of%20the%20subpoena." target="_blank" rel="noreferrer noopener">US law</a>, a court can issue a subpoena to a US resident or national in a foreign country if “the court finds that particular testimony or the production of the document or other thing by him is necessary in the interest of justice.”



A subpoena can also be issued if it is not possible to obtain a testimony without the appearance of the witness. Which means in the case of FTX, whether or not a subpoena of Bankman-Fried — who is currently believed to be in the Bahamas — can be issued will also depend on the other witnesses who will be called upon to testify.



But by Friday morning, Bankman-Fried caved, announcing on Twitter that he would participate in the hearing as requested.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1) I still do not have access to much of my data &#8212; professional or personal. So there is a limit to what I will be able to say, and I won&#39;t be as helpful as I&#39;d like. But as the committee still thinks it would be useful, I am willing to testify on the 13th. <a href="https://t.co/KR34BsNaG1">https://t.co/KR34BsNaG1</a>&mdash; SBF (@SBF_FTX) <a href="https://twitter.com/SBF_FTX/status/1601186246990401537?ref_src=twsrc%5Etfw">December 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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He expressed the intention to limit his testimony to four main areas: FTX US&#8217;s solvency and American customers, pathways that could return value to users internationally, the causes of the crash, and his own failings.



Given that the testimony will be under oath, upon penalty of perjury, it will be interesting to see how the ex-CEO handles questions that touch upon his own <a href="https://blockworks.co/news/sam-bankman-fried-new-attorney" target="_blank" rel="noreferrer noopener">potential legal liability</a>.



 This story was updated on Dec. 9 at 9:08 a.m. ET following Bankman-Fried&#8217;s notice of willingness to testify.



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Maxine Waters Is Prepared To Subpoena, Sam Bankman-Fried Responds

Former FTX CEO and founder Sam Bankman-Fried (SBF) said Sunday he would be willing to testify before congress, but only once he has “finished learning” about the implosion of his crypto empire.



SBF was asked by chairwoman of the House Financial Services Committee, Maxine Waters, to attend a hearing on Dec. 13 to explain his side of events.&nbsp;



Appearing before congress would likely ratchet up pressure against the former FTX CEO and increase the spotlight on exactly what occurred over that past month and <a href="https://blockworks.co/tag/ftx">how the exchange was able to fall apart</a> so quickly.



“We appreciate that you&#8217;ve been candid in your discussions about what happened at FTX,” Waters <a href="https://twitter.com/RepMaxineWaters/status/1598693811252875264?s=20&amp;t=V6XT9iLJgt2XAvUcjPtrrA">tweeted</a> at Bankman-Fried on Friday. Waters added that his willingness to speak up will help affected stakeholders, including customers whose digital assets remain locked on the platform.



The representative for California&#8217;s 43rd congressional district was <a href="https://twitter.com/iamDCinvestor/status/1598700475230175232?s=20&amp;t=V6XT9iLJgt2XAvUcjPtrrA">criticized</a> by some in the crypto community for appearing servile and obsequious. Congressional relationships with Bankman-Fried were often friendly, and his willingness to engage with elected officials has been painted as an attempt to regulate the industry in a manner that would have been friendly to his failed exchange.



Bankman-Fried’s relationships with politicians have been under scrutiny since he made substantial donations to specific members of the Democratic Party. Bankman-Fried claims to have made similar donations to the Republican Party, but to have avoided publicizing them.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">You, as the Chairwoman (or the Committee itself), can just subpoena him to testify. No need to ask nicely on Twitter. It&#39;s House Rule XI clause 2(m). But I&#39;m sure you already knew that.&mdash; Jeremy Hogan (@attorneyjeremy1) <a href="https://twitter.com/attorneyjeremy1/status/1598717704247967748?ref_src=twsrc%5Etfw">December 2, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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In a <a href="https://twitter.com/SBF_FTX/status/1599511560384225281?s=20&amp;t=V6XT9iLJgt2XAvUcjPtrrA" target="_blank" rel="noreferrer noopener">tweeted response</a> to Waters’ request, Bankman-Fried said he would head to Washington DC only when he was ready, and following a review of events.



The refusal to testify voluntarily comes despite Bankman-Fried’s multiple mainstream media interviews which he used to deflect some of the heat over his role in FTX’s implosion, including with <a href="https://www.cnbc.com/video/2022/12/01/sbf-says-didnt-commit-fraud-post-ftx-collapse--interview-cnbc-crypto-world.html">CNBC</a> and <a href="https://abcnews.go.com/US/ftx-crypto-collapse-ceo-sam-bankman-fried-denies/story?id=94215046">ABC News</a> last week.



Both interviews have been criticized for their softball approach to questions over Bankman-Fried’s role in the commingling of customer funds with Alameda — estimated to have blown an $8 billion hole in FTX’s balance sheet.



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Translation: he doesn&#39;t mind lying to Andrew Ross Sorkin or George Stephanopoulos, but lying to Congress under oath is less appealing. <a href="https://t.co/DZTyzMwn9s">https://t.co/DZTyzMwn9s</a>&mdash; Jake Chervinsky (@jchervinsky) <a href="https://twitter.com/jchervinsky/status/1599521955622707200?ref_src=twsrc%5Etfw">December 4, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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It’s not known whether this postponement is a result of legal advice SBF has received, or if house members will seek to compel his testimony.



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