Congress set to hold hearing on Sam Bankman-Fried's crypto exchange FTX Tuesday

FTX founder Sam Bankman-Fried will not be appearing before Congress Tuesday after Bahamian authorities arrested him Monday night at the request of the U.S. Government. 

Rep. Maxine Waters, D-Calif., chair of the House Financial Services Committee, said in a statement Monday night that Bankman-Fried will not be testifying before the committee.

Waters said she was surprised to learn of his arrest.  

“The American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people, and wiped out the hard-earned life savings of so many,” she said. “The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity.” 

John J. Ray III, FTX's current CEO, remains a witness at the hearing and will testify.

Bankman-Fried, in a Friday Twitter post, confirmed his plans to appear at the Capitol, saying he would try to shed light on what led to the crash and his own failings as the former CEO.

A Monday statement from the Royal Bahamas Police Force says he is also expected to appear in local court on Tuesday.

“I still do not have access to much of my data – professional or personal. So there is a limit to what I will be able to say, and I won't be as helpful as I'd like,” Bankman-Fried, also known as SBF, said on Twitter. “I will try to be helpful during the hearing.”

He has yet to respond to a request to appear before a separate hearing from the Senate Committee on Banking, Housing and Urban Affairs on Thursday. 

Here's what to know about FTX's founder and collapse ahead of Tuesday's hearing, which is available to stream on the committee’s website.

Samuel Bankman-Fried, founder and CEO of FTX, testifies during a Senate Committee on Agriculture, Nutrition and Forestry hearing about "Examining Digital Assets: Risks, Regulation, and Innovation," on Capitol Hill in Washington, D.C. on February 09, 2022.

Bankman-Fried arrested:FTX founder Sam Bankman-Fried arrested in Bahamas, indicted in New York, prosecutors say

When did FTX collapse? 

On Nov. 11, FTX filed for bankruptcy and Bankman-Fried resigned as CEO.

What is the FTX scandal?:How the celebrity-endorsed crypto giant collapsed into chaos

What caused FTX to collapse?

FTX, once one of the largest crypto exchanges in the world, collapsed after a CoinDesk article revealed Alameda Research – a trading firm also owned by Bankman-Fried – had a balance sheet full of FTX's exchange token, FTT. 

Binance, a competing cryptocurrency exchange, announced plans to sell its FTT in light of the findings. This triggered mass withdrawals from FTX. The market price of FTT crashed and FTX entered a liquidity crisis.   

What did Sam Bankman-Fried do? 

Bankman-Fried now faces allegations of misappropriating billions worth of customer investments. 

While FTX promised customers not to use their money for trading, Reuters reported that Bankman-Fried secretly transferred $10 billion of FTX’s customer funds to Alameda before its collapse.

The former CEO has maintained that he never intended to defraud anyone, including FTX’s estimated 1.2 million U.S. customers.

John J. Ray III, who replaced Bankman-Fried as CEO, said FTX did not keep appropriate books and records or security controls and used software to conceal the misuse of customer funds.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” Ray said in a court filing, adding that the situation is “unprecedented.” 

Samuel Bankman-Fried, founder and CEO of FTX, testifies during a Senate Committee on Agriculture, Nutrition and Forestry hearing about "Examining Digital Assets: Risks, Regulation, and Innovation," on Capitol Hill in Washington, D.C. on February 09, 2022.

Sam Bankman-Fried:Former CEO of FTX crypto exchange says he will testify before Congress

How much did FTX lose?

Reuters in November reported that $10 billion of client money was transferred between FTX and Alameda.

Bankman-Fried later said $8 billion in customer funds are missing and blamed accounting errors. Court documents show the company did not have an accounting department.  

FTX in November said it owes money to more than 100,000 people.

Why was FTX so popular?

FTX was one of the largest and most well-known crypto exchanges. You could find its name attached to an NBA stadium or in commercials with celebrities like comedian Larry David and NFL quarterback Tom Brady. 

Signage for the FTX Arena, where the Miami Heat basketball team plays, is illuminated on Saturday, Nov. 12, 2022, in Miami.

What is Sam Bankman-Fried's net worth?

Once worth $26.5 billion, Bankman-Fried told Axios last month that he had $100,000 left in his bank account.

“Am I allowed to say a negative number?" he told Axios. "It's complicated. Basically everything I had was just tied up in the company.”

Report:Former billionaire Sam Bankman-Fried says he's down to $100,000 in bank account

What does FTX stand for?

FTX is shorthand for "Futures Exchange."

Is FTX publicly traded?

No, FTX is a private company. 

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