House Financial Services Chair Waters doesn’t plan to subpoena Sam Bankman-Fried to testify at hearing on FTX collapse

House Financial Services Committee Chair Maxine Waters told the panel’s Democrats she doesn’t plan to subpoena former FTX CEO Sam Bankman-Fried to testify at a Dec. 13 hearing about the crypto exchange’s rapid demise, according to people with direct knowledge of the conversation.

Waters informed committee members of her decision at a private meeting Tuesday with Securities and Exchange Commission Chair Gary Gensler on Capitol Hill, these people said, declining to be named in order to speak freely about the private discussion.

Waters said she wants committee staff to try to persuade Bankman-Fried to voluntarily testify, those with knowledge of the meeting said. As of late Wednesday, Bankman-Fried has yet to agree to testify before the House committee, two of the people said.

Waters, who will lose the chairmanship when Republicans take control of the House on Jan. 3, could end up deferring to Rep. Patrick McHenry, R-N.C., the panel’s top Republican and likely next chair, to decide whether to subpoena Bankman-Fried in the next congressional session if the FTX founder declines to voluntarily testify under oath.

Waters invited Bankman-Fried to voluntarily testify before the panel, but she could change her mind and subpoena him. John Jay Ray III, the new FTX CEO, is scheduled to testify at the House hearing.

After CNBC published this article Wednesday night, Waters took issue with the story and said a “subpoena is definitely on the table.” Waters didn’t deny that she told Democrats she didn’t plan to subpoena Bankman-Fried, and a committee spokeswoman declined to comment.

Bankman-Fried has been under scrutiny by federal investigators and lawmakers on Capitol Hill since his cryptocurrency exchange collapsed suddenly last month, bringing to light a host of questionable transactions. The company crashed after FTX reportedly transferred billions of dollars in client funds to Bankman-Fried’s trading firm, Alameda Research.

Senate Banking Committee Chairman Sherrod Brown, D-Ohio, has threatened to subpoena Bankman-Fried if he doesn’t agree to voluntarily show up at that committee’s Dec. 14 hearing on FTX’s implosion. Brown has given Bankman-Fried until 5 p.m. Thursday to respond to the committee’s request.

Waters invited Bankman-Fried to testify before the Financial Services committee in a Dec. 2 tweet, saying she appreciated his candid discussions about FTX. “Your willingness to talk to the public will help the company’s customers, investors, and others. To that end, we would welcome your participation in our hearing on the 13th,” she said.

Bankman-Fried responded likewise in a tweet, saying he would testify but that he might not do it at the upcoming hearing.

“Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain,” Bankman-Fried said. “I’m not sure that will happen by the 13th. But when it does, I will testify.”

Waters more forcefully invited Bankman-Fried to testify in a series of tweets Monday, saying it was “imperative” that he shows up Dec. 13, stopping short of threatening to compel his appearance with a subpoena.

Bankman-Fried’s fall from grace was swift and unforgiving after he spent years as the crypto “darling” on Capitol Hill. He donated almost $40 million toward the 2022 congressional midterm elections, with much of it going to Democrats.

Nishad Singh, who became FTX’s lead engineer in 2019 following a stint at Bankman-Fried’s trading firm Alameda Research, has donated more than $13 million to Democratic Party causes since the start of the 2020 presidential election.

Ryan Salame, the co-CEO of FTX Digital Markets, donated another $23 million, with most of his contributions benefiting Republicans.