SEC Chair Held Hostage By Subpoena Threat Over Crypto Mogul Charges: The Dramatic Showdown Unfolds

Securities and Exchange Commission (SEC) Chair Gary Gensler faces a potential subpoena if the regulator does not deliver information pertaining to the charges filed against Sam Bankman-Fried.

House Financial Services Committee Chair Rep. Patrick McHenry (R-NC) and Rep. Bill Huizenga (R-Mich.), who leads the committee's oversight panel, are seeking the staff memorandum that advised the charges, along with additional information about the case against the embattled cryptocurrency entrepreneur, who also faces criminal charges from U.S. prosecutors, The Block reported.

In a Feb. 10 inquiry, the Republicans sought further insight into the SEC's civil charges against Bankman-Fried and claim that their requests have been obstructed ever since.

They have warned that if the SEC fails to provide the requested information before Gensler's appearance before their committee next week, they will consider using a "compulsory process," likely in the form of a subpoena, to obtain it.

The congressional investigation is focused on the timing of Bankman-Fried's arrest, which took place the night before his scheduled testimony before the House committee in December, alongside interim FTX CEO John Ray III.

Both Democratic and Republican committee members expressed disappointment over missing the opportunity to question Bankman-Fried, especially following the high-profile negotiations to ensure his attendance, as the committee cannot force non-government witnesses to testify.

In a letter to the SEC, they stated, "Ignoring the deadline, the SEC actively impeded Committee staff from discussing the request with anyone in the Office of the General Counsel until Chairman Huizenga formally requested a conversation with the SEC General Counsel.

The subsequent staff-level conversations have yet to yield any of the requested documents."

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The Republicans asserted Gensler and his staff have not provided the sought-after information, which encompassed all communications within the SEC's Enforcement Division concerning Bankman-Fried from the time of FTX's collapse to his indictment, as well as records of communications between the SEC and the Justice Department related to their collaboration on civil and criminal charges filed against Bankman-Fried.

In a letter sent on Thursday, McHenry and Huizenga highlighted an SEC staff briefing and 232 pages of publicly accessible documents, which they argue lack the specifics they require.

They continued to demand the memo that recommended civil charges against Bankman-Fried, as it could offer further information on the timing of the complaint and the criminal charges against the FTX and Alameda Research owner.

The Republican duo set a new deadline of 5 p.m. ET on Monday, April 17, for the SEC to submit its charging recommendation memo, which falls on the evening before Gensler's testimony before the House committee that McHenry and Huizenga are members.

They warn in the letter, "Failure to produce the requested information could result in the Committee considering using compulsory process, if necessary, to obtain the requested information," threatening to issue a subpoena if the SEC does not comply.

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Photo: Third Way Think Tank via Flickr Creative Commons