Senate Banking on FTX

The US Senate Committee on Banking, Housing, and Urban Affairs held a meeting on Wednesday, December 14, regarding the infamous collapse of FTX. The hearing lasted about two hours and will likely be the first of many.

With an agenda entitled “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers,” the Senate Committee sought to dig into the FTX exchange’s implosion and its ramifications across the nascent industry.

Just a day following the headline testimony of FTX CEO John Ray in front of the US House of Finacial Services Committee, the witnesses included celebrities Mr. Wonderful, Kevin O’Leary, Mr. Ben McKenzie, famed actor turned crypto skeptic, plus two other industry experts Prof. Hilary J. Allen, American University Washington College of Law and Jennifer J. Schulp, Director of Financial Regulation Studies, Center for Monetary and Financial Alternatives, Cato Institute.

The witnesses all gave testimony and answered questions from the Senate committee members. Senator Pat Toomey, a notable advocate within the committee, also gave testimony and strongly reminded those listening that it was not the underlying technology that was at fault in the FTX collapse but human failures.

“I want to underscore a bigger issue here: The wrongful behavior that occurred here is not specific to the underlying asset. What appears to have happened here is a complete breakdown in the handling of those assets,” Toomey said in his opening remarks.

An exciting moment in the hearing featured a line of questioning answered by Kevin O’Leary. O’Leary continued his accusations against Binance, stating that former FTX CEO and founder, Sam Bankman-Fried, has him convinced Binance’s actions led to FTX’s insolvency.

Unlike the hearing in the House the day before, the Senate hearing took a lot of air time regarding the need for regulation in the industry. A rational crypto regulatory framework was a common trope throughout and many were able to draw a line between the usage of blockchain and the mismanagement of a company.

The details of the FTX collapse will hopefully be unwound through the transparency of blockchain, but at the start and during this meeting, they remain unclear. But what is clear is that The FTX is showing lawmakers that crypto needs and wants regulation.

To watch the full two-hour hearing see below. If that link does not work in your country, see the government link here.