Disgraced crypto executive Sam Bankman-Fried is having a hard time staying quiet. It took only two weeks after his company FTX’s bankruptcy for Bankman-Fried to start talking to anyone and everyone who wanted an interview. And yet, now that Congress wants to talk with him, he’s resistant. The crypto executive is trying to delay testimony while he gets his ducks in a row, but policymakers are playing hardball.
In mid-November, FTX filed for bankruptcy, bringing the company to an end in the blink of an eye. In just over a week, its image shifted from a multi-billion dollar exchange monolith to a total scam underpinned by lies and questionable ethics.
With billions invested in the company and over $1 billion in investor funds completely missing, there are lots of questions to address. Over the course of the last week, Bankman-Fried has been attempting to answer these questions and more.
Against the wishes of his legal team, the FTX founder has given a slew of interviews in which he plays down conspiracy theories tied to the funds. He denies back-dooring any of the money. He is also looking to dispel rumors of company ties to the Ukrainian government and the Democratic Party. These interviews seem to be completely candid, consisting of phone recordings and live-streamed conversations.
Through these interviews, investors have gotten some of the best details regarding the collapse of the company. And yet, Bankman-Fried is resisting calls to come to Washington, D.C. to testify over the bankruptcy. Whatever his motive, lawmakers appear to be bringing out the big guns in order to get him in front of Congress.
Sam Bankman-Fried Compelled by Congress to Give FTX Testimony
This week, Sam Bankman-Fried is keeping his interview streak. Sitting down with The Block, the FTX founder continues to fight the allegations stacking up. In particular, Bankman-Fried is working against accusations from FTX’s new CEO and insolvency professional John Ray III, who says the company did not properly document much of its operations.
While he is having no trouble going to news publications to try and clear his name, though, Bankman-Fried is butting heads over speaking with Congress. On Sunday, just a day before The Block ran its interview, Bankman-Fried had a Twitter exchange with U.S. Representative and Financial Services Committee Chair Maxine Waters. Waters noted Bankman-Fried’s willingness to engage with the public and requested his presence at Congress’ Dec. 13 hearing on the FTX saga.
Bankman-Fried does not appear so willing to do this. Instead, he publicly responded to Waters, saying that he must finish “learning and reviewing what happened” and that he won’t be ready to speak until that process is finished. In a follow-up, Waters once again noted the ex-exec’s many interviews and reiterated that he will be responsible for attending the hearings.
This all comes just as crypto analytics platform Unusual Whales announces another interview for Sam Bankman-Fried. The interview is slated for Dec. 12, just one day before the Congressional hearing.
Why Won’t Sam Bankman-Fried Testify?
It’s quite obvious that Bankman-Fried has the time to attend this hearing. It’s also quite obvious that he has enough information to provide testimony. So why is he trying to get around going to D.C.? The answer is perjury. It’s also the reason investors can’t fully believe what he has said in interviews up to this point.
There are a number of possibilities factoring into Bankman-Fried’s public navigation of the FTX collapse. One possibility is that he really doesn’t know what happened. John Ray’s comments suggest that the company did not properly bookkeep. Without doing this, Bankman-Fried and other FTX executives truly might not have known where money was going. But another possibility is that Bankman-Fried knows full-well what happened and does not want to reveal the truth.
Both of these cases would lend themselves to a high likelihood of perjury under Congressional testimony. If Bankman-Fried were to lie under oath, the penalties would be severe. However, there’s no perjuring oneself in front of The New York Times or Axios. Moreover, Bankman-Fried doesn’t actually face any formal charges yet. So, the disgrace executive’s incentive to stay out of court and not risk slipping up is high, while the punishment for misspeaking or lying to media outlets is low.
Now, there’s still a chance that regulators find reason to charge Bankman-Fried without his testimony and that he could be extradited to the United States. But until he is legally compelled to do so, it will be unsurprising to see Bankman-Fried avoid Capitol Hill and continue to try to clear his name through other means.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.