The Senate Committee on Agriculture will hold a hearing today (December 1, 2022) at 10 AM ET to review the failure of FTX.
This Committee holds oversight on the commodities industry and, therefore on aspects of crypto markets that are deemed to be regulated commodities.
On November 11, 2022, FTX (International), along with its affiliated firms, including FTX.us and Alamada Research, filed for bankruptcy protection. In the past weeks, there has been an enormous amount of discussion and reflection as to what happened to the crypto exchange, which was once the second-largest crypto trading platform in the world.
In brief, FTX experienced a run-on-the-bank type scenario where account holders rushed to retrieve their funds on the platform. At first, FTX was able to handle the redemptions, but in the end, it was simply too much, as FTX did not have the funds necessary to accommodate all requests. It has been reported that loans to Alameda Research, a hedge fund controlled by FTX CEO Sam Bankman-Fried, were at the crux of the issue as the debt had been collateralized with FTT – FTX’s native token. As the value of FTT rapidly declined, the assumed value evaporated, and things went upside down.
It has been reported that FTX owes creditors over $3 billion.
At today’s hearing, Rostin Behnam, the Chairman Commodity Futures Trading Commission (CFTC), will be the lone witness. Behnam leads one of the two regulatory bodies that had some oversight over FTX and its activities.
Later this month, the House Committee on Financial Services will also hold a hearing on the collapse of FTX. The date of the hearing is not yet available.
The hearing will be live streamed on the Committee’s website.