Following the full Committee hearing entitled, “Investigating the Collapse of FTX, Part I” Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, released the following statement:
“I want to thank Mr. Ray for his participation in the hearing today. Mr. Ray’s task ahead to recover funds for FTX’s million customers is clearly going to be a long and difficult one given the extent of the fraud committed by Mr. Bankman-Fried. This Committee will be closely following his progress and want to know when he encounters obstacles that prevent him from returning funds to customers.
“This Committee is also closely following the Department of Justice’s indictment of Mr. Bankman-Fried on eight criminal counts, including wire fraud, securities fraud and money laundering, and the SEC’s allegations that Bankman-Fried, FTX and Alameda Research committed numerous significant securities violations. I also take pause that the SEC’s civil complaint alleges that Mr. Bankman-Fried misled this Committee last year when he testified. While I believe that justice will be served, I remain concerned that this collapse is an indication of broader challenges to the long-term viability and security of the digital assets industry as a whole.
“SEC Chair Gensler has stated clearly and repeatedly that his agency sees massive noncompliance by crypto firms. He has argued that firms act as if issuing their instruments on a blockchain somehow exempts them from what every other company in the US is required to do: obey our securities laws. And it’s pervasive in this industry. Firms that act as hedge funds are not registering as hedge funds, firms that are broker/dealers or securities exchanges are intentionally not registering as such with the SEC, and the tokens being sold to customers and investors are also not being registered. As a result, I’m concerned that the millions of customers who were lied to by FTX, are just the tip of the iceberg.
“It's clear that the time to act was yesterday. While the SEC has a huge job ahead of it and will require additional funding, Congress also has a role to play. We must not only investigate, we must legislate. I stand committed to working with the Ranking Member when he becomes Chairman of this Committee next year on drafting the rules that will effectively police this industry and prevent another FTX from happening again.
