SEC Chief Held Hostage by Subpoena Threat of Crypto Mogul Allegations: The Dramatic Showdown Unfolds

Chairman of the Securities and Exchange Commission (SEC). Gary Gensler faces a potential subpoena if the regulator does not supply information relating to the charges brought against it Sam Bankman-Fried.

Chairman of the House Finance Committee Rep. Patrick McHenry (R-NC) and Rep. Bill Huizenga (R-Mich.), who chairs the committee’s oversight panel, is seeking the staff memo that informed the allegations, 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 probe, Republicans sought additional insight into the SEC’s civil charges against Bankman-Fried and say their requests have been stymied 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 occurred the night before his scheduled testimony before a House committee in December, along with interim FTX chief John Ray III.

Both Democratic and Republican committee members expressed disappointment at missing the opportunity to question Bankman-Fried, especially after the high-profile negotiations to secure his attendance, as the committee cannot compel non-state witnesses to testify.

In a letter to the SEC, they stated: “Ignoring the deadline, the SEC actively prevented committee staff from discussing the request with anyone in the General Counsel’s office until Chairman Huizenga formally requested a conversation with the SEC General Counsel.

The subsequent conversations at staff level have not yet produced any of the requested documents.”

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The Republicans argued that Gensler and his staff have not provided the sought-after information, which included all communications within the SEC’s enforcement division regarding Bankman-Fried from the time of FTX’s collapse to his indictment, as well as records of communications between the SEC and the SEC. Department of Justice related to their cooperation on civil and criminal charges against Bankman-Fried.

In a letter sent Thursday, McHenry and Huizenga highlighted an SEC staff briefing and 232 pages of publicly available documents, which they claim lack the specifics they need.

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

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

They warn in the letter, “Failure to produce the requested information may cause the committee to consider using compulsory process, if necessary, to obtain the requested information,” and threaten to issue a subpoena if the SEC does not comply.

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Photo: Third Way Think Tank via Flickr Creative Commons