- FTX's downfall labelled as resulting from intentional sabotage by former CEO Sam Bankman-Fried and associates.
- The US Department of Justice has been asked to hold the responsible entities accountable to the "fullest extent of the law".
- Sequoia Capital apologized to its investors for the loss of $150 million t due to FTX's collapse.
FTX's former CEO, Sam Bankman-Fried (SBF), recently apologized to its employees, stating he believed the bankrupt company could still be saved. However, lawmakers in the United States intend to hold SBF accountable beyond the apology letter and according to the law.
FTX's collapse wasn't an accident
FTX and its associated 130 companies filing for bankruptcy caused losses to over one million creditors. While SBF may believe he could do something about it, United States Attorney General Merrick Garland and Assistant Attorney General Kenneth Polite have been requested to do something about FTX's ex-CEO himself.
In a letter to the Department of Justice (DOJ), US Senators Elizabeth Warren and Sheldon Whitehouse urged the Attorney Generals to hold the company's executives accountable to the fullest extent of the law. They stated that the DOJ is expected to conduct an investigation into FTX's collapse with the utmost scrutiny. The letter added,
"As this situation unfolds, new facts will undoubtedly shed more light on how Bankman-Fried and his associates' deception has harmed FTX's customers, and customers of any company that was exposed to the contagion – and may reveal that the problems with the crypto industry extend well beyond FTX."
The Senators believed FTX's unbecoming wasn't simply due to careless business decisions and sloppy management practices. According to Senators Warren and Whitehouse, SBF and other FTX executives conducted "intentional and fraudulent tactics" to make money themselves.
To make things right, the letter asked the DOJ to focus on the flesh and blood victims of white-collar wrongdoing. They added that SBF and his associates should also be prosecuted for their crimes if need be.
Sequoia Capital takes accountability
Following FTX's downfall, venture capital firm Sequoia Capital also came forward to report its losses. Sequoia's executives apologized for the $150 million lost on the crypto exchange on a call with its fund investors. The partners stated that the due diligence for FTX's investment was sabotaged by SBF himself. This was because he failed to disclose the exchange's connections with Alameda Research.
Thus Sequoia Capital's partners vowed to improve the due diligence for future investments. The executives even believed that the firm would be in the position to have its potential investments audited by one of the Big Four accounting firms.
On the other hand, institutions continue to come forward and report the losses caused by FTX's collapse. As reported by FXStreet earlier this week, Genesis Global Capital also sought to raise about $1 billion to prevent resorting to filing bankruptcy. The company had over $175 million locked up in derivatives on FTX, which were lost.
The company was noted saying,
"Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors."
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