US Senate Banking Committee Holds Meeting on FTX Collapse

The majority of Senators were able to clearly distinguish between the technological shortcomings at FTX and human errors.

Dec 15, 2022
by Michael
US Senate Banking Committee Holds Meeting on FTX Collapse
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Senate Banking Committee Meeting

On December 14, a briefing was held by the US Senate Committee on Banking, Housing, and Urban Affairs to discuss the tragic collapse of FTX. The two-hour long session was the first of many that will undoubtedly follow. The Senate Committee looked into the collapse of the FTX exchange and its effects on the developing industry with an agenda titled "Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers."

The witnesses included celebrities Mr. Wonderful, Kevin O'Leary, Mr. Ben McKenzie, legendary actor turned crypto skeptic, as well as two additional industry specialists Prof. Hilary J. Allen, American University Washington College of Law and Jennifer J. Schulp, Director of Financial Regulation Studies, Center for Monetary and Financial Alternatives, Cato Institute.

All of the witnesses testified and responded to inquiries from the Senate committee members. Senator Pat Toomey, a prominent supporter on the committee, also provided testimony and emphasized to those in attendance that human errors, not the underlying technology, were to blame for the FTX disaster.

Crypto Needs Stiff Regulation 

During the meeting, Kevin O'Leary's response to a line of inquiry was interesting to see. The former CEO and creator of FTX, Sam Bankman-Fried, having convinced O'Leary that Binance's actions are what caused FTX to become insolvent, O'Leary persisted in his criticism of Binance. The Cabinet meeting took up a lot of airtime emphasizing the need for industry regulation, in contrast to the House meeting the day before. 

A prevalent theme throughout was a reasonable legal framework for cryptocurrencies, and many people were able to make a connection between the misuse of blockchain technology and poor corporate governance. Since blockchain transactions are transparent, it is hoped that the specifics of the FTX collapse will eventually come to light. However, at this meeting's beginning, those specifics are still unknown

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