FTX Collapse: Bankman-Fried Reluctantly Agrees to Testify Before Congress

The founder of the bankrupt cryptocurrency exchange was under the threat of a subpoena.

The pressure finally paid off. 

Sam Bankman-Fried, the fallen founder of the bankrupt cryptocurrency exchange FTX, will finally take a break from his media offensive to answer questions from lawmakers.

After having initially declined an invitation from Congress, he just reluctantly accepted it, bowing to the threat of a subpoena. He will appear before the House Financial Services Committee on Dec. 13 for a hearing focused on the fall of his empire. 

This crypto group was made up of FTX and Alameda Research, a hedge fund that also created a trading platform. 

Bankman-Fried filed for Chapter 11 bankruptcy on Nov. 11 after both companies ran out of cash.

'I Am Willing to Testify'

"I still do not have access to much of my data -- professional or personal," the former trader wrote on Dec. 9. "So there is a limit to what I will be able to say, and I won't be as helpful as I'd like."

"But as the committee still thinks it would be useful, I am willing to testify on the 13th."

He then gave the points on which he intends to respond during this hearing, as if he were the person who will conduct it.

"I will try to be helpful during the hearing, and to shed what light I can on:

-- FTX US's solvency and American customers

-- Pathways that could return value to users internationally

-- What I think led to the crash

-- My own failings," he said in another message.

He ended with a message of apology and humility, which resembles what he has said in his various interviews since Nov. 30.

"I had thought of myself as a model CEO, who wouldn't become lazy or disconnected. Which made it that much more destructive when I did. I'm sorry. Hopefully people can learn from the difference between who I was and who I could have been."

Bankman-Fried seems to be telling elected officials that he will have nothing more to tell them than what he has said in his interviews.

"I made a lot of mistakes," he said during his interview with The New York Times/DealBook. "There are things I would give anything to be able to do over again. I didn't ever try to commit fraud on anyone."

As authorities try to piece together how a company like FTX, valued at $32 billion in February, could have collapsed within days, the former trader began a media tour to explain that what happened was due to bad luck. 

Rep. Maxine Waters (D-California), chairwoman of the House Financial Services Committee, invited the deposed former king of crypto to appear before the panel on Dec. 13.

"@SBF_FTX, we appreciate that you've been candid in your discussions about what happened at #FTX," the congresswoman wrote on Twitter on Dec. 2. "Your willingness to talk to the public will help the company's customers, investors, and others. To that end, we would welcome your participation in our hearing on the 13th."

Bankman-Fried, who was the institutional face of crypto and spent a lot of time in Washington lobbying for the sector, earlier on didn't seem to be in a rush to take up the invitation.

"Rep. Waters, and the House Committee on Financial Services: Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain," SBF responded on Dec. 4. "I'm not sure that will happen by the 13th. But when it does, I will testify."

A Subpoena on the Table

The next day Waters almost begged him to honor the invitation.

"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," the congresswoman responded on Dec. 5.

"As you know, the collapse of FTX has harmed over one million people. Your testimony would not only be meaningful to members of Congress, but is also critical to the American people."

Waters ended her plea by telling Bankman-Fried: "It is imperative that you attend our hearing on the 13th, and we are willing to schedule continued hearings if there is more information to be shared later."

That failed to convince the former trader, who resides in the Bahamas, to make the trip to Washington. It took Waters's threat of a subpoena on Dec. 7 for Bankman-Fried to agree to appear before the lawmakers.

"A subpoena is definitely on the table. Stay tuned," the congresswoman posted.

Bankman-Fried, who spent much of his time in Washington influencing politicians and regulators on industry regulations, will return to this city holding a different status: that of someone about whom there are big suspicions of fraud. He is no longer the great fundraiser who donated to the campaigns of politicians.

There is particular pressure on members of Congress in this case because Bankman-Fried was a major donor to the Democratic Party but also to Republicans. 

The general public wants to see how their legislators will deal with this case when they have often received donations from the former crypto king, now dubbed the Bernie Madoff of the crypto space on social networks.