As FTX teeters on the verge of collapse, former CEO Sam Bankman-Fried has fallen out of favor as the industry "darling" in Washington drew scrutiny from regulators and lawmakers in both parties.
Bankman- Fried apologized on Thursday for being an industry advocate on Capitol Hill. He admitted that he should have done better.
The company announced Friday that Bankman-Fried stepped down as CEO of the exchange.
The implosion of FTX has led the Biden White House and two powerful Democratic committee chairs to publicly criticize the company.
Bankman-Fried said that the company's international operation has a total market value of assets and collateral that is higher than client deposits.
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, they have decided not to acquire FTX. The Securities and Exchange Commission and the Department of Justice are looking into the matter.
The chair of the House Financial Services Committee is considering opening a congressional inquiry and possibly calling Bankman-Fried to testify about the company's near collapse in the coming weeks, according to a committee aide who asked not to be named. Depending on the outcome of several key races that haven't been called, Democrats could lose control of the House in January.
Waters said in a statement Thursday that there are major consequences when there are no federal oversight and protections for customers.
If the House flips to Republicans, Patrick McHenry, the current GOP committee ranking member, will likely become the chairman, but it's not clear what he will do. A group that received millions of dollars in donations from Bankman- Fried supported McHenry's reelection campaign. Records from the Federal Election Commission show that the FTX CEO gave over $30 million to the Democrats.
He indicated that legislation was needed to rein in the industry after the company was acquired.
The recent events show the need for Congress to act. Congress needs to establish a framework that protects Americans and allows innovation to thrive in the U.S.
According to Bankman-Fried, there are irresponsible actors in the digital-asset industry, but FTX is not one of them and has built a resilient, risk-reducing platform as a competitive advantage.
Jim Himes, a member of the House Financial Services Committee, said it was clear that Bankman-Fried would lose his access to lawmakers on Capitol Hill.
Himes said that the Washington darling, who knew mostly Democrats, just evaporated. Himes said Bankman- Fried was your classic founder. He was a nerdy genius and you thought he had more intelligence than you did.
The chair of the Senate Banking Committee called on regulators to investigate what happened at FTX.
Brown said that it was important that the financial watchdogs look into what led to FTX's collapse.
The near collapse of FTX shows the need for more regulation, according to the White House press secretary.
Pierre said that the most recent news underscores the need for prudent regulation of Cryptocurrencies. The White House and relevant agencies will keep a close watch on the situation.
Bankman-Fried gave $5 million to a super PAC that supported Joe Biden as he took on Donald Trump.
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