As such, committee chairman Rep. Patrick McHenry, of North Carolina, and Rep. Bill Huizenga, the subcommittee chairman for Oversight and Investigations, of Michigan, sent the Securities and Exchange Commission (SEC) a letter detailing those concerns. The correspondence was directed at SEC Chair Gary Gensler, and it calls upon the chairman to release all communications and records between the SEC’s Division of Enforcement, the Department of Justice (DOJ) and the Office of the Chair related to the timing of the charges filed against the embattled cryptocurrency mogul.
Bankman-Fried was arrested and charged with fraud shortly before a scheduled date with the House Financial Services Committee, explains the House majority members. The night he was arrested, the SEC’s director of the Division of Enforcement, Gurbir Grewal, endorsed the move and highlighted that the SEC authorized the charges at hand. That announcement was also subject to congressional scrutiny.
“On December 13, 2022, the SEC filed charges against Sam Bankman-Fried for ‘concealing his diversion of FTX customers’ funds to crypto trading firm, Alameda Research, while raising more than $1.8 billion from investors,’” reads the letter. “Presumably, the SEC’s Division of Enforcement did a complete investigation into the actions by Sam Bankman-Fried and presented the findings to the Commission for its review and to authorize the charges. Yet, the timing of the charges and his arrest raise serious questions about the SEC’s process and cooperation with the Department of Justice.”
According to the SEC, the complaint against Bankman-Fried, who is a co-founder of the Bahamas-based FTX platform, alleges he raised billions of dollars under the guise the company offers a safe place to trade cryptocurrency, but in fact “orchestrated a years-long fraud.”
From Twitter
U.S. House Committee on Financial Services @FSCDems ·Feb 10
"#RELEASE: Ranking Member @RepMaxineWaters Urges Chair McHenry to Call on Sam Bankman-Fried (@SBF_FTX) to Testify Before the Committee and Continue Bipartisan Effort to Get to the Bottom of #FTX Collapse, Pass Urgently Needed Legislation | https://bit.ly/3DYKQ88 https://pbs.twimg.com/media/Foo3jS4XwAAA3dC?format=jpg&name=360x360"
“FTX operated behind a veneer of legitimacy Mr. Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary ‘risk engine,’ and FTX’s adherence to specific investor protection principles and detailed terms of service. But as we allege in our complaint, that veneer wasn’t just thin, it was fraudulent,” said Grewal in the SEC announcement of the charges.
McHenry and Huizenga have requested all relevant communication and records between SEC employees in the Division of Enforcement, the Department of Justice and the Office of the Chair that took place between Wednesday, Nov. 2, 2022 and Thursday, Feb. 9, 2023. The materials are expected by 5 p.m. on Thursday, Feb. 23.
“The Committee on Financial Services has jurisdiction to oversee the activities of the Securities and Exchange Commission pursuant to Rule X of the Rules of the House of Representatives,” the letter concludes.
