Blog: Senate Ag Leaders Want to Show Crypto Bill Isn’t Watered Down by FTX – DTN The Progressive Farmer

The Senate Agriculture Committee has set a hearing for Dec. 1 on the FTX collapse. The committee’s leaders also want to show their legislation is not watered down because it was backed by FTX’s founder, but instead would provide consumer protections under the Commodity Futures Trading Commission. (Image logo from FTX)

The chairwoman and ranking member of the Senate Agriculture Committee on Monday announced plans for the committee to hold a hearing Dec. 1 on the collapse of the cryptocurrency exchange FTX with the chairman of the Commodity Futures Trading Commission (CFTC) to testify.

Sen. Debbie Stabenow, D-Mich., chairwoman of the committee and Sen. John Boozman, R-Ark., ranking member of the committee, will ensure the Senate Agriculture Committee is the first out of the gate with a full hearing on the now-bankrupt cryptocurrency exchange. Stabenow and Boozman will seek to establish that their legislation giving the CFTC regulatory authority over cryptocurrencies is the needed regulatory vehicle.

Because of the historical tie between the agricultural commodities and oversight of commodity exchanges, the House and Senate Agriculture Committees have oversight over CFTC’s regulatory authority. That has led the committees to have to look at the complexity of digital assets such as cryptocurrencies and their exchanges.

Rep. Maxine Waters, D-Calif., outgoing chairwoman of the House Committee on Financial Services, and Rep. Patrick McHenry, R-N.C., the committee ranking member, also vowed last week to convene hearing on the FTX failure sometime in December.

FTX Fall From Grace

FTX quickly went from a shining star slapping its name on arenas to a collapsed cryptocurrency exchange that filed bankruptcy and lost funds for more than a million creditors. FTX saw a run on deposits and could be looking at least a $3.1 billion shortfall in funds just to its 50 largest creditors, according to bankruptcy filings.

FTX’s problems came to light after the company took billions of dollars of customer funds to support speculative trading by its sister firm, Alameda Research. FTX may have loaned roughly $8 billion to Alameda, according to the Wall Street Journal.

The WSJ on Monday reported a lot of small investors who put in $1,800, $4,000 or $10,000 in FTX were drawn by the 8% interest rate on deposits. Those people are now doubting they will ever see their money again.

John J. Ray III, an insolvency attorney who had once oversaw the Enron bankruptcy, took over last week as CEO of FTX. He noted in a bankruptcy filing that he has been trying to deal with multiple requests from the CFTC, the Securities and Exchange Commission, U.S. attorneys and others. He also noted in the court filing, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” That’s saying a lot, considering Ray cleaned up the Enron mess.

This brings everything back to the former CEO, Sam Bankman-Fried, 30, founder of FTX and at one time reportedly considered to be worth $26 billion. Bankman-Fried is reportedly in the Bahamas.

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