Washington turns up heat on crypto 'darling' Sam Bankman-Fried following FTX bankruptcy

As FTX teeters connected the brink of collapse, erstwhile CEO Sam Bankman-Fried has fallen retired of favour arsenic the manufacture "darling" successful Washington and drawn scrutiny from regulators and lawmakers successful some parties.

Bankman-Fried, who was a regular beingness connected Capitol Hill implicit the past twelvemonth arsenic an manufacture advocate, tweeted connected Thursday that helium was sorry. "I f---ed up, and should person done better," helium said.

Bankman-Fried stepped down arsenic CEO of the cryptocurrency speech helium founded, and FTX filed for Chapter 11 bankruptcy protection, the institution announced Friday. A spokesperson for FTX and Bankman-Fried didn't instrumentality a petition for comment.

The company's implosion has led the Biden White House and 2 almighty Democratic committee chairs to publically knock FTX and telephone for tighter oversight of the broader industry.

Excluding the cryptocurrency exchange's U.S. business, Bankman-Fried tweeted that the company's planetary cognition has a full marketplace worth of assets and collateral that is higher than lawsuit deposits, but helium said that is "different from liquidity for transportation — arsenic you tin archer from the authorities of withdrawals."

Binance, a abstracted cryptocurrency exchange, announced Wednesday that it was backing retired of acquiring FTX "as a result of firm owed diligence, arsenic good arsenic the latest quality reports regarding mishandled lawsuit funds and alleged U.S. bureau investigations." The Securities and Exchange Commission and the Department of Justice are reportedly investigating FTX for civilian and transgression violations of securities laws.

Rep. Maxine Waters, D-Calif., seat of the House Financial Services Committee, is considering opening a legislature inquiry, adjacent perchance calling Bankman-Fried to the Hill to attest astir the company's adjacent illness successful the coming weeks, according to a committee adjutant who requested anonymity to sermon backstage deliberations. Democrats are astatine hazard of losing power of the House successful January, depending connected the result of respective cardinal races that haven't been called yet.

"Now much than ever, it is wide that determination are large consequences erstwhile cryptocurrency entities run without robust national oversight and protections for customers," Waters said successful a connection Thursday.

If the House flips to Republicans, Rep. Patrick McHenry, the existent GOP committee ranking member, volition apt go the chairman. The Crypto Innovation PAC, which is financed successful portion by a abstracted radical that saw millions successful donations from Bankman-Fried, backed McHenry's palmy 2022 reelection campaign. The FTX CEO donated much than $30 cardinal toward the 2022 midterms, according to Federal Election Commission records.

However, McHenry indicated the request for authorities to rein successful the manufacture aft Binance initially announced it would get the institution to assistance stave disconnected a liquidity crunch.

"The caller events amusement the necessity of Congressional action," McHenry said successful a connection Tuesday. "It's imperative that Congress found a model that ensures Americans person capable protections portion besides allowing innovation to thrive present successful the U.S."

Late past year, Bankman-Fried told lawmakers astatine a hearing, "There are irresponsible actors successful the digital-asset industry, and those actors pull the headlines, but FTX is not 1 of them and successful information has built a resilient, risk-reducing level arsenic a competitory advantage."

Rep. Jim Himes, D-Conn., a subordinate of the House Financial Services Committee, said it's wide Bankman-Fried volition suffer his entree to lawmakers connected Capitol Hill arsenic investigators uncover what happened.

"Now you spot the Washington darling, who knew people, chiefly Democrats, and that persona, conscionable evaporate," Himes said. When asked what Bankman-Fried was similar to conscionable with, Himes said, "he was your classical founder. Nerdy genius and you assumed helium had doubly the IQ you did."

Sen. Sherrod Brown, D-Ohio, seat of the influential Senate Banking Committee, called connected regulators to look into what happened astatine FTX.

"It is crucial that our fiscal watchdogs look into what led to FTX's illness truthful we tin afloat recognize the misconduct and abuses that took place," Brown said successful a statement.

White House property caput Karine Jean-Pierre told reporters Thursday the adjacent illness of FTX proves much regularisation is needed.

"The astir caller quality further underscores these concerns and highlights wherefore prudent regularisation of cryptocurrencies is so needed," Pierre said. "The White House, on with the applicable agencies, volition again intimately show the concern arsenic it develops."

Bankman-Fried donated $5 cardinal during the 2020 predetermination to a ace PAC that supported past campaigner Joe Biden arsenic helium took connected erstwhile President Donald Trump.