(Bloomberg) — Here are the key takeaways from the House committee hearing on Tuesday into FTX’s collapse. Click here for our TOPLive blog.
(Bloomberg) — Here are the key takeaways from the House committee hearing on Tuesday into FTX’s collapse. Click here for our TOPLive blog.
- John Ray III, the current CEO of FTX, said funds of all customers of FTX.com, FTX.US and of Alameda were comingled. While the US exchange’s customers are likely to fare better, he said the exact magnitude of the financial hole bankrupt companies have is still unclear. He doesn’t yet know how much money customers may get back or when, but it’s a matter of months, not weeks.
- Ray repeatedly told lawmakers that he is more hopeful about recouping assets tied to FTX.US accounts than those for international accounts on FTX.com. He said that US customers will possibly have a “greater” and “sooner” recovery than international account customers, though there is still more work to do for before that can happen.
- Ray said he has secured about $1 billion in funds, but may not have found all of the coins owned by FTX-related businesses. He said it’s possible the companies’ founders have hidden some funds on thumb drives somewhere. He also accused Bankman-Fried and Gary Wang of transferring hundreds of million in funds to the Bahamian authorities, which he said have been uncooperative.
- The biggest barrier to his investigation is a complete lack of record-keeping, Ray said. He said FTX didn’t conduct daily reconciliations, top executives had access to all accounts, and Alameda had unlimited access to FTX-related funds.
- The hearing showed a partisan divide: There are clear factions forming among partisan lines in the wake of the FTX collapse. Republicans generally say that SBF was a bad actor in a space that is otherwise exploring new and beneficial technologies. Democrats are much more skeptical, saying that FTX is an example of the potential for fraud and unsavory schemes.
- William Timmons, a Republican from South Carolina who is a former prosecutor, questioned why Bankman-Fried was arrested within hours of testifying at the hearing. Bankman-Fried was arrested in the Bahamas late Monday, within hours of his scheduled testimony before the committee. Federal prosecutors have charged him with eight criminal counts, including conspiracy and wire fraud in what US Attorney Damian Williams called “one of the biggest financial frauds in American history.” The Securities and Exchange Commission and the Commodity Futures Trading Commission have filed separate suits against the FTX founder. Extradition efforts are ongoing, prosecutors said.
–With assistance from Steven T. Dennis and Madlin Mekelburg.
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