- US Congressmen highlighted SEC Chair’s refusal to be transparent regarding his interaction with FTX
- SEC had formally charged Bankman-Fried with defrauding investors in December
In a fiery and contentious hearing on September 27, 2023, Representative Patrick McHenry, who chairs the United States House Financial Services Committee, issued a stern warning to the Securities and Exchange Commission (SEC) regarding their ongoing investigation into former FTX CEO Sam Bankman-Fried, widely known as SBF.
The brewing tension between Congress and the SEC has escalated, with McHenry suggesting the possibility of subpoenaing the SEC to secure critical documents related to the case.
At the outset of the hearing, McHenry criticized SEC Chair Gary Gensler for what he characterized as a troubling lack of transparency in the agency’s dealings with FTX and Bankman-Fried. McHenry accused Gensler of withholding vital information from Congress, stating unequivocally, “You refuse to be transparent with Congress regarding your interactions with FTX and Sam Bankman-Fried. Your continued lack of responsiveness to this committee’s legitimate oversight is nothing short of unacceptable.”
The crux of the matter revolves around the SEC’s alleged reluctance to provide Congress with crucial records that would help shed light on the agency’s investigation into Bankman-Fried. McHenry expressed his deep frustration, asserting, “I do not want to be the first chairman of this committee to issue a subpoena to the Securities and Exchange Commission, and you should not want to be the first SEC chair to receive a Congressional subpoena.”
The SEC had formally charged Bankman-Fried with defrauding investors in December, following a separate criminal indictment against him by the U.S. Department of Justice. McHenry, together with Representative Bill Huizenga, initiated an investigation into the SEC’s handling of the FTX case back in February. Their objective was to obtain internal communications, memoranda pertaining to the FTX charges, and any correspondence between the SEC and the Justice Department.
In subsequent letters addressed to Gensler in April and May, McHenry and Huizenga accused the SEC of consistently disregarding their requests for documents. They voiced their dissatisfaction with the SEC’s apparent lack of cooperation and forcefully demanded full compliance with their records requests.
During the September 27 hearing, McHenry went a step further, making allegations that Gensler’s actions seemed to be undermining the digital asset ecosystem. He claimed that the SEC had made multiple requests for documents related to the timing of SBF’s arrest, particularly given his previously scheduled appearance before Congress.
McHenry’s growing exasperation was evident as he declared, “Seven months later, the committee has not received a single non-public document that was not part of a Freedom of Information Act production. Our patience is wearing thin.”