Lawmaker Presses SEC for Transparency Regarding Documents Linked to Sam Bankman-Fried’s Arrest

Representative Bill Huizenga, the chair of the United States House Oversight and Investigations Subcommittee, has expressed dissatisfaction with the Securities and Exchange Commission (SEC) for its failure to provide relevant documents related to the timing of charges and the subsequent arrest of former FTX CEO Sam Bankman-Fried.

During a hearing on June 22 focused on SEC oversight, Rep. Huizenga criticized the commission, stating that “100% of the documents” provided by the SEC on Bankman-Fried’s charges and arrest were publicly available. This implied that the SEC’s response to the congressional committee was inadequate. Rep. Huizenga further pointed out that the SEC had missed the deadline of February 24 to produce documents that allegedly raised concerns about the SEC’s process and collaboration with the Department of Justice in relation to Bankman-Fried’s charges and arrest.

According to Rep. Huizenga, the documents provided by the SEC contained little more than public briefings on how the SEC and the Department of Justice had worked together on the case involving Bankman-Fried. In response, Megan Barbero, the general counsel for the SEC, explained that some documents were easier to release to the committee as they did not require a commission vote, while others were more complex and required significant effort to compile.

Barbero also expressed concerns about sharing the commission’s action memo, which contains information that could potentially prejudice their civil enforcement action and parallel criminal investigation. Balancing these concerns with the committee’s priorities poses a challenge for the SEC.

While other lawmakers raised different lines of questioning, FTX and Bankman-Fried were brought up during discussions on SEC oversight. Representative Pete Sessions of Texas inquired about a reported meeting between SEC Chair Gary Gensler and Bankman-Fried, suggesting Gensler had personal access to the former FTX CEO. Representative Al Green, also from Texas, called for increased regulation of crypto firms like FTX, which he accused of “destroying investors’ dreams with ignoble schemes.” Green further requested Gensler’s testimony.

The SEC’s investigation into Bankman-Fried began when he was scheduled to testify before the House Financial Services Committee in December. At that time, Bankman-Fried was residing in the Bahamas, and FTX had declared bankruptcy in November 2022, with a criminal investigation into his alleged misconduct already underway. However, before he could testify, Bankman-Fried was arrested in the Bahamas and later extradited to the United States.

Bankman-Fried is facing two criminal trials, with the first trial scheduled for October 2023 and the second for March 2024, involving a total of eight criminal charges and five counts. The SEC and the Commodity Futures Trading Commission have also filed separate civil suits against Bankman-Fried, but those cases have been deferred until the conclusion of the criminal proceedings.

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