FTX’s Sam Bankman-Fried (SBF) faces the threat of a subpoena from the US Senate if he fails to respond within the next few hours

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

Our current inertial system is gradually but surely consolidating at a point where former FTX CEO Sam Bankman Fried (SBF) can finally be held responsible for the alleged corruption and sheer ruthlessness with which he systematically defrauded thousands of clients, resulting in the One of the largest bankruptcies in American corporate history.

To wit, the United States Senate Committee on Banking, Housing, and Urban Affairs sent a letter to Sam Bankman-Fried on 07The tenth in December, to demand the presence of the disgraced FTX CEO at a hearing scheduled for the 14thThe tenth Dec.

In the letter, the committee chair, Sherrod Brown, urged Sam Bankman-Fried to contact his staff by 05:00 pm on 08The tenth December or face a subpoena:

Please respond to my staff by 5:00 p.m. on Thursday, December 8, to discuss your participation in the hearing. If you choose not to appear, I am prepared, along with ratings member Pat Twomey, to issue a subpoena to compel your testimony. “

On a similar note, the US House Committee on Financial Services is also scheduled to hold a separate hearing regarding the collapse of FTX on the 13th.The tenth Dec. Committee member Maxine Waters has already tweeted about her willingness to push for a formal subpoena if Sam Bankman-Fred continues his stated reluctance to attend the hearing.

As we’ve noted in a number of our previous posts, the fundamental problem with FTX has been its subtle symbiotic relationship with the trading arm of Sam Bankman-Fried’s crypto empire, Alameda Research. FTX appears to have held its clients’ funds in a bank account intertwined with Alameda Research, giving the cryptocurrency trading firm the opportunity to “borrow” – most likely withdraw – about $10 billion directly from FTX clients’ deposits to place leveraged bets using illiquid collateral, consisting of Mostly coins like FTT, Serum, etc. FTX also allowed Alameda to take over the positions of its clients who were exposed to a margin call, resulting in lucrative profits for the trading company during the peak of the 2021 bull market but accelerating losses in the current market.

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However, that house of cards collapsed when Alameda’s balance sheet was leaked, showing significant exposure to FTX’s internal FTT token. This prompted Binance to start dumping its FTT stash, crashing the token’s price in the process. Amidst the scuffle, Alameda Research CEO Carolyn Ellison dumped the trading company’s lowest price on the FTT token, inviting a veritable onslaught of speculative attacks. With Alameda’s ability to repay its obligations weakening because its collateral of illiquid tokens quickly lost their inflated values, and with soaring customer withdrawals sending banks flooding in, FTX had no choice, in the end, to declare bankruptcy.

Meanwhile, as previously mentioned, the mega noose around Sam Bankman-Fried is getting tighter now. According to a New York Times report, US federal prosecutors are examining whether Sam Bankman Fried (SBF), FTX and Alameda had any role in precipitating Terra’s collapse earlier this summer. Prosecutors are specifically looking into the wave of sell orders that caused Terra’s UST stablecoin to be de-pegged from the US dollar. The volume of these initial sell orders would have overwhelmed the Terra algorithmic stablecoin, precluding any chance of matching incoming sell orders to the inherent reservoir burning mechanism to mint additional LUNA coins, which should theoretically restore stability. The inside source revealed to The New York Times that Alameda had bet big on the drop in the price of LUNA coin.

Terra’s Do Kwon has also made similar allegations against Sam Bankman-Fried and FTX/Alameda. Meanwhile, the saga continues.

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