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McHenry at FTX Hearing: We Have to Separate Out the Bad Actions of an Individual from the Good Created by an Industry and Innovation

Washington, Dec 13 -

Today, the House Financial Services Committee is holding a bipartisan hearing to investigate the events surrounding the collapse of digital asset trading platform FTX. Committee Members will question current FTX CEO John Ray to get the answers the firm’s customers and the American people deserve.

Watch Chairman-elect Patrick McHenry’s (NC-10) opening remarks here.

Read Chairman-elect McHenry’s opening remarks as prepared for delivery:

“Thank you, Madam Chair. 

“We’ve heard everything but the truth.

“Tweets, DMs, and interviews are no substitute for the facts.

“That is why Chairwoman Waters and I worked together to get this hearing on the books.

“We also worked together to invite two witnesses. One, John Ray, is proven to be a reliable witness. The second, well, I looked forward to getting his lies on the record.

“Nevertheless, the arrest of Sam Bankman-Fried is welcome news.

“But it still does not get to the bottom of what happened at FTX, why it happened, and who else may be responsible.

 “We need to understand the flow of funds between FTX and Alameda Research and the 130 related entities.

“We need to examine the actions of those who may have contributed to what has been called a ‘complete failure of corporate controls,’ to quote the newly appointed CEO John Ray.

“And we need answers for the U.S. platform customers stuck in limbo.

 “But our work doesn’t stop there.

“We have an obligation to do everything in our power to ensure this never happens again.

“There’s an old saying: “there is nothing new under the sun.”

 “It’s safe to assume that fraud and fraudsters have been around just about as long as that phrase.

“His play is nothing new, we’ve seen it before:

“In the late 1800s, when Union Pacific purposefully inflated the price of railway construction to line its executives’ pockets.

“In the early 1900s, when the conman George C. Parker was arrested for illegally “selling” the Brooklyn bridge, Madison Square Garden, and the Statue of Liberty.

“And in the early 2000s, when it was revealed Enron engaged in massive corporate fraud and corruption, sending shockwaves throughout the business world.

“There are many comparisons you can draw between each one of these pretenders and the alleged actions of Mr. Bankman-Fried. It appears to be the same, old-school fraud, just using new technology.

“But it is important to note: we still use railroads, we still buy and sell real estate, and we still rely on businesses to provide services.

“We have to separate out the bad actions of an individual from the good created by an industry and an innovation.

“So let me be clear, I believe in the promise of digital assets and those around the world building blockchain technologies.

“This is why I have worked, and will continue to work, to provide clear rules of the road for the digital asset ecosystem. That is how we protect American consumers and investors in this marketplace and allow innovation to occur in the U.S.

“I’ll finish with this: we know SEC Chair Gensler’s regulation-by-enforcement-only approach is not going to stop bad actors.

“Next year, I look forward to hearing from Mr. Gensler early and often on how we can provide clarity on the application of our securities laws to trading platforms—which he has failed to do.

“The Financial Services Committee still has a role to play in this fact-finding mission, which we will start today, and continue to work toward a legislative outcome to prevent this from happening again.

“I yield back.”

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