Bankman-Fried’s FTX bankruptcy high on Congress 2023 agenda

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Members of Congress on both sides of the aisle call for congressional action following Chapter 11 bankruptcy filing by FTX Trading Ltd., the second largest cryptocurrency exchange in the world, which was founded by Democratic mega-moneyman Sam Bankman-Fried.

The cryptocurrency market consists of hundreds of billions of digital financial assets and is seen by advocates as the eventual replacement for hard money. As a major player in the industry, FTX represented approximately 130 related corporate entities globally.

The bankruptcy filing affects most of them, including Bankman-Fried’s crypto hedge fund, Alameda Research, and FTX US, but not subsidiaries FTX Australia Pty., FTX Express Pay Ltd., and others.

Bankman-Fried has recognized that he”[expletive]-up” and expressed regret for his mismanagement.

It initially appeared that around 100,000 creditors would be affected by the bankruptcy, but a amendment on the record said the total may actually be closer to one million.

“FTX’s recent collapse is a strong warning that cryptocurrencies may fail, and just as we’ve seen with OTC derivatives that led to [the 2008] financial crisis, these failures can have a ripple effect on consumers and other parts of our financial system. The continued turmoil in the cryptocurrency market is why we need to think carefully about how to regulate cryptocurrencies and their role in our economy,” said the chairman of the Senate Banking, Housing, and Housing Committee. of Urban Affairs, Sherrod Brown (D-Ohio). statement.

“It is crucial that our financial watchdogs examine what led to FTX’s collapse so that we can fully understand the misconduct and abuse that took place. I will continue to work with them to hold bad actors in the crypto markets accountable. I am determined to find the best way forward to protect consumers and the stability of US markets and the banking system,” Brown said.

Sen. Pat Toomey (R-Pa.), the ranking minority member of the Senate panel, is retiring, as is second in line, Sen. Richard Shelby (R-Ala.). Sen. Mike Crapo (R-Idaho), who is expected to succeed Toomey as the committee’s top Republican, could not be reached for comment.

On the House side, with Republicans poised to regain control when the 118th Congress convenes Jan. 3, 2023, Rep. Patrick McHenry (RN.C.) is expected to succeed Rep. Maxine Waters (D-Calif.) in as long as President of the Chamber of Financial Services.

A spokesperson for Waters did not respond to The Epoch Times request for comment.

McHenry published a statement stating that “For years, I have advocated for Congress to develop a clear regulatory framework for the digital asset ecosystem, including trading platforms. Recent events show the need for congressional action. It is imperative that Congress establish a framework that ensures Americans have adequate protections while allowing innovation to thrive here in the United States.

But new regulations aimed at covering the emerging realm of cryptocurrency financial activity will not be the only focus of upcoming congressional attention on the issue, thanks to the role of its main competitor and significant policy contributions. of the failing exchange’s chief executive, Sam Bankman. -Fried, and his close associate Ryan Salame.

As The Epoch Times previously reported, FTX’s crash began when the top executive of its biggest competitor, Binance, tweeted statements questioning the strength of Bankman-Fried’s position.

Changpeng Zhao, CEO of Binance posted messages also announced that it was getting rid of its stakes in an FTX entity. “We will try to do this in a way that minimizes the impact on the market. Due to market conditions and limited liquidity, we expect this to take a few months to complete,” Zhao said.

Political contributions will be front and center as Bankman-Fried, whose personal worth was estimated at $16 billion before filing for bankruptcy, has been a prolific donor to Democrats in Congress and on the national political stage.

Bankman-Fried gave nearly $40 million in the 2022 election cycle, according to opensecrets.orgmaking him the nation’s sixth-largest individual political contributor and the second-largest Democratic contributor.

The bulk of Bankman-Fried’s largesse, $27 million, went to a Democratic political action committee (PAC), Protect Our Future. He gave $5 million to President Joe Biden’s 2020 campaign. He also said he could donate up to $1 billion to Biden and the Democrats in the 2024 campaign.

But Bankman-Fried also gave to a few Republicans, including Sen. John Hoeven (RN.D.) and Sen. John Boozman (R-Ark.).

It is not uncommon for corporate special interests to give campaign contributions to both sides in political races and FTX was no different in this regard. Salame, who was CEO of FTX Digital Markets, Inc., was a prolific Republican donor, with a total of nearly $27 million, according to opensecrets.org. Those contributions made Salame the 14th largest individual donor in the 2022 cycle and the 10th largest among Republicans.

At least two recipients of contributions from sources related to Bankman-Fried or Salame—Rep. Kevin Hern (R-Okla.) and Rep. Chuy Garcia (D-Calif.)—have would have either returned the funds or transferred them to charity.

Within hours of FTX’s bankruptcy, social media was buzzing with complaints that Bankman-Fried was part of an elaborate operation in which billions of US dollars paid by Biden and Congress to help Ukraine defend against Russian military invasion were then reinvested in the cryptocurrency entity , then distributed to Democrats.

Brian Darling, former general counsel for Sen. Rand Paul (R-Ky.) and now head of government affairs for Liberty, expressed doubts about those claims.

“The whole theory that FTX has a connection to the Democratic Party and Ukraine needs to be looked into to dispel a conspiracy theory or to see if there were any shenanigans. Way too soon to bank these allegations” , Darling told The Epoch Times.

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Congressional Correspondent for The Epoch Times.

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