Welcome to Law decoded, your weekly digest on all the latest developments in regulation.
So, Sam Bankman-Fried, public enemy number one, won’t appear in front of Senators on Dec. 14, as he missed the deadline for responding to a Senate Banking Committee request. The entrepreneur could appear before Congress on December 13th, though.
Responding to a series of tweets by Maxine Waters (chairwoman of the Financial Services Committee), the former CEO of FTX stated his willingness to testify before a hearing of the U.S. House of Representatives. John Ray, who took over as FTX CEO on Nov. 11 following Bankman-Fried’s resignation, will also be present as a witness.
The House Hearing surely won’t be the last time Bankman-Fried encounters tough questions from the state. According to reports, the United States Department of Justice is investigating a possible fraud in which Bankman-Fried siphoned funds offshore days before FTX filed bankruptcy. According to an anonymous informant, DOJ officials met with FTX’s court-appointed overseers to discuss the scope of the information they needed for further investigation. The DOJ will also investigate whether Bankman-Fried illegally transferred FTX funds Alameda Research.
And that’s not the final list of potential allegations. A watchdog group, the Citizens for Responsibility and Ethics in Washington, believes the businessmen made “dark money donations.” It has filed the complaint with the Federal Election Commission, accusing Bankman-Fried of “direct and serious violations of the Federal Election Campaign Act” for donating anonymously to the Republican party during the last electoral campaign. In fact, Bankman-Fried admitted the same in a recent interview.
U.S. Congress introduces proof-of-reserves bills and crypto consumer protection legislation
United States Representative Ritchie Torres introduced bills in Congress to ban the use of customer funds by cryptocurrency trading platforms and require them to show proof of reserves to Securities and Exchange Commission (SEC). The bills carry the titles of “Crypto Consumer Investor Protection Act’’ and “Crypto Exchange Disclosure Act,’’ and have been referred to the House Financial Services Committee.
Torres also wrote a letter requesting a Government Accountability Office review of “the SEC’s failure to protect the investing public from the egregious mismanagement and malfeasance of FTX.”
A new deadline is set by a court for the Celsius restructuring program
Celsius, a bankrupt crypto lender, was granted an extension to its exclusivity period up until February 15, 2023. The court approved the extension, giving Celsius another few months to file for Chapter 11 restructuring plans. After two court hearings, Dec. 6, the court approved the extension of the exclusivity period. Celsius posted a tweet requesting approval to allow the sale of stablecoins that would provide liquidity for ongoing operations. The extension period is being used by the company to plan for a standalone business.
Ripple submits final submission to SEC
Ripple has submitted its final submission to the U.S. regulator, ending a two-year-long fight between SEC and Ripple. In its motion, Ripple argued that the SEC has failed to prove that its offering of XRP (XRP) between 2013 and 2020 was an offer or sale of an “investment contract” and, therefore, a security under federal law. Ripple concluded the document by stating that “the court should grant Defendant’s Motion and should deny the SEC’s Motion.”