The U.S. House Financial Service Committee leadership is exploring the possibility of issuing a subpoena to the U.S. Securities and Exchange Commission (SEC) in pursuit of crucial documents connected to the FTX cryptocurrency exchange, and its former CEO Sam Bankman-Fried (SBF).
Basis for the Subpoena Threats on SEC
As per a recent hearing, Rep. Patrick McHenry, Chairman of the Committee expressed his intention to exercise the body’s authority to compel the SEC to provide essential documentation pertaining to SBF. Meanwhile, the proposed subpoena is indicative of McHenry’s resolve to delve into matters of regulatory concern and how the regulator is handling potential misconduct within the cryptocurrency industry.
By seeking access to SEC documents, he aims to shed light on any irregularities or lapses in the oversight that may have occurred during the tenure of SBF as the exchange’s CEO. As such, the committee has made several attempts to get the documents but McHenry claimed that SEC Chair, Gary Gensler has refused to come out plain with Congress while trying to choke off the digital asset ecosystem.
In February, the Financial Services Committee asked the SEC to release documents related to the communications between its staff and the Department of Justice regarding the charges filed against the failed entrepreneur. After refusal, the committee’s leadership submitted the request again in April and May, after asserting that the SEC had provided only publicly available information.
As discussions and deliberations progress, it remains to be seen whether Rep. McHenry will indeed move forward with the subpoena. Nevertheless, the mere suggestions of such action send a clear message that regulatory bodies, including the SEC, are expected to be accountable and transparent in their operations in dealing with crypto and other emerging markets.
Background Details on SBF’s Case
The 31-year-old entrepreneur is facing fraud charges related to the collapse of FTX, including misleading customers, commingling funds, and making unlawful political contributions. Despite the enormity of these charges, he has pleaded not guilty to them all, setting the stage for the upcoming trial in October.
In addition to the criminal charges, SBF is facing civil lawsuits from the SEC and the Commodity Futures Trading Commission (CFTC), further intensifying the legal scrutiny surrounding his actions. In a twist to his intended case, the US District Judge Lewis Kaplan made a ruling that banned all seven expert witnesses proposed to testify in his trial that is scheduled to commence on October 3, 2023.