On Tuesday, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee held a hearing entitled, “Investigating the Collapse of FTX, Part I” to kick start the Committee’s efforts into uncovering the truth about the collapse of FTX. Despite the fact that prior to his expected appearance, former CEO and founder, Sam Bankman-Fried was arrested by the Department of Justice’s Southern District of New York and hit with charges from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), Chairwoman Waters and Committee Democrats remained committed to using Tuesday’s hearing to get to the bottom of what happened, and deliver the answers that the American public deserves.

  
Left: John Ray III

Part I of the Committee’s investigation on Tuesday began with testimony from John Ray III, who recently took over FTX after Bankman-Fried resigned. Mr. Ray, who testified before the Committee on Tuesday, also oversaw one of the largest corporate bankruptcies in U.S. history – Enron. In FTX’s bankruptcy filing, Mr. Ray declared that he had never in his career seen such a “complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” Under the leadership of Chairwoman Waters’, Committee Democrats dug deeper into Mr. Ray’s findings and questioned the new CEO on:

• FTX’s deep ties with Alameda, a crypto hedge fund predominantly owned by Bankman-Fried, that gambled away billions of dollars in customer assets that were inappropriately transferred from FTX.
  
  
• How Mr. Ray and his team are trying to recover funds for customers, by piecing together Bankman-Fried’s broken recordkeeping.
  
  
• Potentially unlawful transfers to Bankman-Fried himself, as well as his friends and family. 
  
  
• The lack of sufficient risk management, including a lack of controls to appropriately monitor any leverage the business took on.
  
  
• And more.
  

Mr. Ray’s testimony helped to shine a light on the facts involving the collapse. As the hearing wrapped up, Chairwoman Waters vowed that the Committee will be closely following Mr. Ray’s progress in recovering funds for FTX’s customers. Waters also assured the public that the investigation of Bankman-Fried’s fraud and crimes will continue into next year.

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