Congressman said tougher oversight of the Securities and Exchange Commission's crypto policies 'begins' with the timing of FTX CEO's arrest.
A pair of powerful members of the U.S. House of Representatives are demanding to know if the Securities and Exchange Commission was involved in the timing of Sam Bankman-Fried's arrest.
In a letter to the SEC, politicians demanded internal communications as well as any communications between the agency and the Department of Justice related to the arrest.
The Dec. 12 arrest of Bankman-Fried by authorities in The Bahamas prevented the former FTX CEO from testifying before the House Financial Services Committee on Dec. 13 as scheduled, angering members of both parties. It happened as soon as the DoJ revealed the indictment.
The testimony would have meant Bankman-Fried giving an explanation about the collapse of FTX under oath, and allowing members of Congress the opportunity to grill him for hours. Post-bankruptcy CEO John Ray III testified alone, as scheduled.
Bankman-Fried has been charged with eight counts including fraud over allegations he diverted $10 billion from exchange customers' accounts to shore up his private trading firm, Alameda Research.
A Shot Across the Bow
The demand for documents goes beyond one issue, however. It launches what the House GOP has promised will be aggressive oversight of an agency Republicans have accused of regulatory overreach.
In Friday's letter, Committee Chairman Patrick McHenry and Oversight and Investigations Subcommittee Chairman Bill Huizenga, both Republicans, noted that the SEC's director of enforcement praised the DoJ's action on the night of Bankman-Fried's arrest and announced that the agency had authorized charges of its own against him. It said:
"The timing of the charges and his arrest raise serious questions about the SEC's process and cooperation with the Department of Justice. The American people deserve transparency from you and your agency."
In a tweet about the document request, Rep. Huizenga said it marks the beginning of "our oversight" of the SEC.
Rep. Huizenga criticized SEC Chairman Gary Gensler for failing to "abide by his own policies to 'come in and talk'" — a line the agency has used regularly in warning cryptocurrency exchanges and lenders that nearly all the tokens they list are unregistered securities.
"The House GOP will hold him accountable," Rep. Huizenga said.
Rep. McHenry has promised to make crypto regulation and oversight a priority. In January, he created the Subcommittee on Digital Assets, Financial Technology and Inclusion, telling Politico:
"We've got to respond for oversight and policymaking on a new asset class."
