FTX committed ‘old-fashioned embezzlement,’ CEO tells lawmakers in searing hearing

FTX committed 'old-fashioned embezzlement,' CEO tells lawmakers in searing hearing
Written by admin

The House Financial Services Committee held a hearing Tuesday on the collapse of cryptocurrency exchange FTX following the Monday night arrest of founder Sam Bankman-Fried in the Bahamas as US regulators launched a series of civil charges. and penalties against the former billionaire.

The Justice Department and Bahamian authorities said Bankman-Fried, who was previously scheduled to testify before the panel, was arrested based on a US indictment that was unsealed shortly after the hearing began.

The US Attorneys Office for the Southern District of New York indicted the disgraced crypto executive with eight criminal counts: conspiracy to commit wire fraud and securities fraud, individual counts of securities fraud and wire fraud, money laundering money and conspiracy to circumvent campaign finance regulations.

John J. Ray, the company’s new chief executive officer and the panel’s only witness, told lawmakers the company had “no records of any kind,” using QuickBooks accounting software to track its multibillion-dollar portfolio.

“This is really old-fashioned embezzlement. This is just taking money from clients and using it for their own purposes. Nothing fancy,” Ray said in searing testimony that lasted more than four hours. “Sophisticated, maybe in the way that they’re hiding something, frankly, right in front of your eyes. This is just embezzlement. Old school, old school.”

The company imploded and requested Chapter 11 bankruptcy last month after transferring billions of dollars in FTX client funds to Bankman-Fried’s hedge fund Alameda Research.

The Securities and Exchange Commission also accused the former crypto “Dear” on Tuesday morning with allegedly “orchestrating a scheme to defraud equity investors in FTX Trading,” according to the agency.

Bankman-Fried had also been asked by the Senate Banking Committee to testify at a hearing on Wednesday that she previously refused to attend.

Before her company imploded, Bankman-Fried donated nearly $40 million to candidates, campaigns and political action committees in the 2022 midterm elections, with most of her publicly disclosed contributions going to Democrats. Ryan Salame, co-CEO of FTX Digital Markets, donated another $23 million, with most of his contributions going to Republicans.

About the author


Leave a Comment