Lawmakers were gearing up to grill Sam Bankman-Fried about his role in FTX’s collapse, and the state of cryptocurrency more broadly, before his arrest in the Bahamas scotched their plans Monday night.
Nonetheless, Congress is still planning to go forward with back-to-back hearings focused on his company’s failings. On Tuesday, the House Financial Services panel is set to welcome a sole witness: John Ray, the interim CEO of FTX. The Senate Banking Committee is expected to follow suit on Wednesday with another hearing on FTX and the broader crypto ecosystem. Bankman-Fried is an investor in Semafor.
“While I am disappointed that we will not be able to hear from Mr. Bankman-Fried tomorrow, we remain committed to getting to the bottom of what happened,” Rep. Maxine Waters, D-Calif., chair of the House panel, said in a statement Monday night.
One group is likely breathing a collective sigh of relief. Crypto proponents, who have been trying to separate themselves from FTX’s gross corporate failures and possible criminal behavior, were bracing for a disastrous hearing that would have further tarred the entire industry with Bankman-Fried’s antics. (On Monday morning, Reuters revealed that the fallen CEO was preparing to start his testimony by telling lawmakers, “I fucked up.”)
Brett Quick, head of government affairs at the Crypto Council for Innovation, said lobbyists were preparing for the fallen billionaire to say “bizarre things” on the witness stand. She added, “I don’t think that it’s a reflection on the industry more generally.”
Even some lawmakers had wondered aloud if it was a good idea for him to testify in the middle of what seemed like a manic spree of self-incrimination. Earlier that day, he gave an interview on Twitter Spaces about his culpability — while playing video games.
“If I were his lawyer, I would sure encourage him not to come,” Sen. Cynthia Lummis, R-Wyo., said Monday evening before the arrest was announced. “It’s amazing that he’s going to one of the committees. I think that’s a big mistake.”
The Bahamian authorities squelched that potential spectacle, giving the industry’s advocates in Washington something to applaud instead. “News of SBF’s arrest is a move towards vindication for all of the good, dedicated, and honest people in the crypto ecosystem,” Kristin Smith, executive director of the Blockchain association, said in a statement.
Reactions from lawmakers, meanwhile, ranged from celebration (Sen. Sherrod Brown, D-Ohio, whose committee also wanted Bankman-Fried to testify) to annoyance that authorities didn’t wait to let him testify (Rep. Lee Zeldin, R-N.Y.).
Rep. Alexandria Ocasio-Cortez, D-N.Y., who sits on the Financial Services committee, tweeted that she was “disappointed” that her panel would be deprived of a chance to question Bankman-Fried, but looked forward to “justice being served in this case.”
There’s still no immediate sign that Bankman-Fried’s arrest alters the landscape for future crypto regulations. “We think that the misuse of cryptocurrency screams the need for and makes the case for responsible regulation. [Sen. Gillibrand and I] think we have the best bill,” Lummis said on Monday. Lawmakers backing a regulatory bill supported by Bankman-Fried are still defending it amid renewed scrutiny.