WASHINGTON – Congress waded into the complex, mystifying world of cryptocurrency Tuesday with a hearing on FTX, a newfangled company that found an old-fashioned way to lose billions of dollars, according to its CEO.
Federal prosecutors unsealed an eight-count indictment Tuesday against a former CEO, Sam Bankman-Fried, who was arrested in the Bahamas on charges including wire fraud and misusing customer funds. Customers lost an estimated $8 billion and the company has filed for Chapter 11 bankruptcy protection.
The hearing before the House Financial Services Committee explored the new frontier of cryptocurrency for transferring money – and wealth – through the digital realm. The unfamiliar landscape adopted a language of blockchain and crypto wallet.
But the allegations are simple enough. FTX Trading Ltd. assets were routinely comingled with another company, Alameda Research LLC, where the company and Bankman-Fried allegedly appropriated customer funds for their own use, such as buying luxury real estate.
“This is really old-fashioned embezzlement,” said John Ray III, who took over as CEO the day the company filed for bankruptcy on Nov. 11. “This is just taking money from customers and using it for your own purpose.”
- Who is testifying? John J. Ray III, who took over as CEO Nov. 11, has spent his 40-year career handling insolvency cases, including managing Enron through its bankruptcy caused by accounting fraud.
- FTX lost billions, Ray said: Ray said Tuesday he…
