SEC Under Fire: US Lawmaker Requests Answers on Documents Related to Sam Bankman-Fried’s Arrest

Rep. Bill Huizenga Criticizes SEC for Lack of Documents

Michigan Representative Bill Huizenga, chair of the United States House Oversight and Investigations Subcommittee, has criticized the Securities and Exchange Commission (SEC) for not providing the necessary paperwork concerning the timing of the charges and arrest of ex-FTX CEO Sam Bankman-Fried.

At a June 22 hearing on the SEC’s oversight, Rep. Huizenga remarked that “100% of the documents” pertaining to SBF’s charges and arrest were available to the public, implying that the commission had not satisfactorily answered the congressional committee’s queries. The legislator censured the SEC for not meeting the February 24th deadline to submit documents that supposedly posed “serious questions” about the SEC’s procedure and collaboration with the Department of Justice in relation to SBF’s charges and arrest.

Rep. Huizenga suggested that the documents provided by the SEC were merely public briefings on “how the SEC and the Justice Department collaborated” concerning SBF’s case. However, Megan Barbero, the SEC’s general counsel, argued that releasing such documents to the committee was easier since they “did not require a commission vote” and others were a “lengthy process and undertaking”.

Rep. Huizenga inquired, “Are we now obligated to forward all our SEC questions to the Department of Justice?”

Legislators Debate SEC’s Supervision and Crypto Regulation

Though their lines of inquiry differed from Rep. Huizenga’s, other legislators raised the names of FTX and Bankman-Fried while debating the SEC’s supervision. Rep. Pete Sessions from Texas inquired about a purported gathering between Gary Gensler and SBF, asserting that the SEC chair had “personal contact” with the ex-FTX head. Additionally, Rep. Al Green of Texas asked for the regulation of crypto companies like FTX, which he said “ruined investors’ aspirations with unscrupulous plans,” and also called for Gensler to appear as a witness.

Binance, Binance.US, and CZ have claimed that the SEC made “misleading” remarks regarding exchange assets.

The SEC inquiry originated from Bankman-Fried’s scheduled appearance before the House Financial Services Committee hearing on Dec. 13. At the time of FTX’s bankruptcy in November 2022, he was situated in the Bahamas and a criminal inquiry into his purported wrongdoings was in progress. Prior to Bankman-Fried’s testimony in the Congress, he was apprehended in the Bahamas and subsequently extradited to the United States.

Authorities are preparing to hold two criminal trials for Bankman-Fried on 8 criminal charges and 5 counts, the first starting in October 2023 and the second in March 2024. The Securities and Exchange Commission and the Commodity Futures Trading Commission have also lodged separate civil suits against SBF, but those cases have been put on hold until the criminal proceedings are finished.

Does SEC Chair Gary Gensler have the ultimate authority when it comes to crypto regulation?