Sens. Warren and Durbin Seek Explanation From FTX’s Sam Bankman-Fried

The developments around the collapse of FTX justify concerns that the crypto industry “is built to favor scammers,” U.S. Sens. Elizabeth Warren, D-Mass., and Dick Durbin, D-Ill., said in a letter sent to the current and former CEOs of the crypto exchange. 

In the letter dated Nov. 16 and addressed to former CEO Sam Bankman-Fried and current CEO John Jay Ray III, the senators note that investor funds worth billions of dollars seem to have “disappeared into the ether” and ask for an accounting of business practices and financial activities performed before and after the collapse of FTX. 

“These massive losses raise questions about the behavior of former FTX CEO Sam Bankman-Fried and other company executives, the apparent lack of due diligence by venture capital and other big investment funds eager to get rich off crypto, and the risk of broader contagion across the crypto market that could multiply retail investors’ losses — all of which ‘call into question the promise of the industry,’” Warren and Durbin wrote in a passage highlighted in a Nov. 17 press release. 

FTX did not immediately respond to PYMNTS’ request for comment. 

In a Nov. 22 press release issued after a Delaware bankruptcy court approved the “First Day” motions of and about 101 affiliated companies, Ray said the company is working to maximize value for FTX stakeholders. 

“We will continue working to implement necessary controls, and secure and marshal the company’s assets,” Ray said in the release. “As we review the business, we have already begun receiving interest from potential buyers for our assets and we will conduct an orderly process to reorganize or sell FTX assets around the world for the benefit of stakeholders.” 

In the senators’ letter, Warren and Durbin ask about FTX’s liquidity crisis, customer funds transferred out of FTX, the relationship between FTX and Alameda Research, customer assets that went missing and Nov. 12 transactions in which $663 million in digital assets were moved out of FTX wallets.