After Sam Bankman-Fried skipped his remote House testimony – and the current CEO dug the disgraced FTX founders’ defense deeper into the ground – one Republican congressman called his actions and gross mismanagement “crazy” and “totally asinine.”
“It is totally asinine, crazy to me that a prosecution team would not want their future defendant to come before our committee and continue spilling his guts to Congress, which he’d done in the media the last few weeks,” Rep. Lance Gooden, R-Texas, said in an appearance on “Mornings with Maria” Wednesday.
FTX CEO John Ray III laid the blame for the cryptocurrency exchange’s collapse on founder and former chief executive Sam Bankman-Fried and his top executives on Tuesday, telling Congress they gambled with customers’ money without any safeguards to protect their investments.
“The FTX group’s collapse appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company entrusted with other people’s money or assets,” Ray said.
WHERE DID THE MONEY GO IN FTX CRYPTO COLLAPSE?
Also admitting “utter failure” on every level and “unacceptable management practices” that exposed consumers to significant losses, the current CEO noted the investigation into the exchange’s collapse is still ongoing. Rep. Gooden, who was at Tuesday’s hearing, expressed he looks forward to questioning FTX execs on Bankman-Fried’s donations to Democrats.
“In this case, contributions taken from Bankman-Fried were stolen money, from people who want to be made whole. And in the case of the U.S. subsidiary of FTX, why aren’t we talking about all of these politicians that took money from him, returning it back so it can get back in the hands of those who’ve lost money?” Gooden said.
Following his arrest, officials said Bankman-Fried is accused of defrauding customers and investors out of more than $1.8 billion to fund a luxurious lifestyle. He’s also contributed nearly $40 million to Democratic campaigns, and $262,200 to Republicans during the midterm cycle.
“They saw him as a rising star that was going to bankroll their political future,” Gooden said. “Remember, he made promises to donate quite a large sum in the general election this past cycle, but he did not follow through. And Democrats were very disappointed.”
“And I think they were very disappointed when all this came out and they realized that the money they had taken was, in fact, stolen and embezzled money,” the congressman continued. “And so now they find themselves thinking, well, we should thank the Justice Department for arresting the guy because he was going to humiliate us in our hearing.”
WHITE HOUSE DODGES QUESTION ON RETURNING POLITICAL DONATIONS FROM FTX FOUNDER SAM BANKMAN-FRIED
Federal prosecutors allege that beginning in 2019, Sam Bankman-Fried diverted investors’ money to cover expenses, debts and risky trades at his crypto hedge fund, Alameda Research, in addition to making lavish purchases and illegal campaign contributions without telling his customers, according to the 13-page indictment.
“Stealing is a basic crime that has been against the rules since the Ten Commandments came out,” Gooden added. “It’s very obvious: If someone gives you money to do one thing with, and you do something else with it, that is basic stealing. And I don’t think any amount of regulation would have perhaps prevented him from doing that. But there was a total blind eye on this gentleman in particular, I believe, because of his political contributions.”
In a heated moment during Tuesday’s hearing, Gooden called out House Financial Services Committee Chairwoman Maxine Waters for attempting to end the session without letting him question John Ray III.
“It was very strange. One, she wanted to end the hearing. Two, there was a vote that was taking place, but the vote was called 30 minutes before that exchange,” Gooden explained. “We could have had a recess, everyone could have gone to vote, and we come back and finish the hearing. I don’t know why she wanted to end the hearing. I wanted to ask many more questions than I had the time to ask.”
Waters allegedly received contributions from Bankman-Fried, and footage from a hearing last December of the Chairwoman blowing a kiss to the then-CEO is re-circulating on Twitter.
“I had just witnessed the whole hearing and no one was really talking about donations, they’re still not, by the way. And so I’m going to continue to ask that question. I want us to get answers from people that took money from them,” Gooden said. “And I want to know why they’re not returning these funds, because we’ve got Americans that want to be made whole and they’ll probably never be. But at least some portion of those funds could be returned.”
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The White House on Tuesday refused to answer questions about whether President Biden will return political donations from disgraced FTX founder Sam Bankman-Fried.
White House press secretary Karine Jean-Pierre repeated her often-used response: “I’m covered by the Hatch Act.”
“[I’m] limited on what I can say, and anything that’s connected to political contributions from here I would refer you to the DNC on that,” she said.
FOX Business’ Chris Pandalfo, Louis Casiano, Marta Dhanis and Bradford Betz contributed to this report.