The former and current executives of the bankrupt cryptocurrency exchange FTX were pressured by the chairman of a subcommittee of the US House of Representatives to provide documents related to the finances of the exchange.
“FTX customers, former employees and the public deserve answers,” wrote Raja Krishnamurthy, chairman of the economic and consumer policy subcommittee, in a Nov. 18 letter addressed to both former FTX CEO Sam Bankman-Fried and current exchange CEO John J. Ray III, who took over after FTX filed for bankruptcy.
Krishnamurthy added that the subcommittee was “requesting details on the significant liquidity issues that FTX has experienced, the company’s sudden decision to file for bankruptcy, and the potential impact of these actions on clients who have used your exchange.”
He insisted that the exchange provide a plethora of information regarding its finances, including an explanation of liquidity issues, balance sheets prior to its crash in early November, its current crypto holdings, and a debt repayment plan for clients.
Krishnamurti also asked for information about who manages the exchange’s finances, any data received by FTX from Alameda Research CEO Caroline Ellison, and a description of any “back door” that could be used to move funds under the noses of auditors or other FTX departments.
Former and current FTX executives were reminded to submit documentation as part of Bankman-Fried’s Aug. 30 request for information on steps FTX is taking to combat fraud and fraud.
Similar letters were sent to Binance.US, Coinbase, Kraken, and KuCoin crypto exchanges.
The subcommittee has set a December 1 deadline for FTX to receive the requested documentation to help determine “what went wrong at FTX” and what steps Congress can take to ensure “proper regulation of the crypto industry and protection of investors.”
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The subcommittee’s deadline coincides with the November 16 announcement of a scheduled December 16 hearing of members of the U.S. House of Representatives’ Financial Services Committee that will examine the FTX collapse and “the broader implications for the digital asset ecosystem.”
Krishnamurti’s letter followed similar demands made on November 16 by Senators Elizabeth Warren and Richard Durbin, who asked Bankman-Fried and Ray to provide a similar mass of documents related to the collapse of FTX.