US Rep: Crypto industry is ‘garden of snakes’

On Balance with Leland Vittert

(NewsNation) — Sam Bankman-Fried, the founder and former CEO of FTX, faces charges accusing him of a host of financial crimes and campaign finance violations. Prosecutors allege that the disgraced crypto king played a key role in the collapse of FTX and hid its issues from investors.

Congressman Brad Sherman is a member of the House Financial Services Committee. He has always been skeptical of cryptocurrency and has pushed for more regulation of it.

Sherman says for five years, he has called to prohibit all Americans from investing in crypto. He believes crypto, not just Sam Bankman-Fried, is the problem.

“Sam Bankman-Fried is not just a snake in the crypto garden. Crypto is a garden of snakes. Americans should not be invested in it,” Sherman said.

An SEC complaint says Bankman-Fried has raised more than $1.8 billion from equity investors since 2019 by suggesting that FTX was a safe way to trade crypto assets. Instead, the complaint says, Bankman-Fried diverted customer funds to Alameda Research without telling them.

“He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns and make private investments, among other uses,” the complaint reads. “None of this was disclosed to FTX equity investors or to the platform’s trading customers.”

Bankman-Fried also made a number of political donations. Sherman says he did not receive any of the contributions and those who received money should give it back.

“If you received money from Sam Bankman-Fried, it wasn’t his money. He stole it from the customers and that money should be returned, not to Sam Bankman-Fried, but to the customers … It’s simply absurd to be in a situation where the crypto billionaire bros are spending money, and, of course, lobbyists here in Washington, pushing for crypto to get light regulation.”

At the request of the U.S. government, authorities in The Bahamas arrested Bankman-Fried on Monday. The arrest came just one day before he was set to testify in front of the House Financial Services Committee. Some lawmakers have expressed their disappointment that Bankman-Fried would not be testifying under oath due to the arrest.

A spokesperson for Bankman-Fried had no immediate comment Tuesday about the allegations against him. Bankman-Fried has a right to contest his possible extradition to the U.S. That could slow down the process but would likely not stop his transfer.

The maximum potential prison exposure from the charges against Bankman-Fried is 115 years, according to Nicholas Biase, a prosecutors spokesperson.

The Associated Press contributed to this report.

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