The Blubber

Per Senate Letter

Senator Sherrod Brown wrote a letter to request FTX founder Sam Bankman-Fried to testify in a hearing called "Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers." The Senator said that should SBF choose not to appear; they are prepared to issue a subpoena to compel the FTX founder's testimony.

The letter emphasized three major unanswered questions SBF will be called to testify, highlighting how the "clear misuse of client funds" resulted in billions of dollars being wiped out. The first question was why there was a misappropriation of client funds.

In countless interviews, SBF gave explanations about how certain accounts were on margin but in a surprise question by Coffeezilla on YouTube; the former FTX founder was asked if he was treating all client assets the same, going against the terms of service.

Coffeezilla argued that there should've been a separation of funds for people that never agreed to have their funds loaned out or put on margin. Per the FTX terms of service, the YouTuber said there should have been a 1:1 backing, and lastly, asking if the backing existed or not, which SBF couldn't answer if there was a separation.

The next reason was how clients were blocked from withdrawing their own money, which FTX previously announced was because of an "unauthorized transaction," per CNBC. The article circled around how digital assets would be transferred to a cold wallet.

Chief Security Officer of Kraken, Nick Percoco, announced that they identified the alleged hacker and that FTX or SBF will explain why they were "utilizing funds from their verified Kraken account to complete this transaction."

Kraken decided to freeze accounts associated with Alameda Research and the FTX Group while assuring users that they were not affected by the issue.

The last unanswered question noted in the letter was how SBF himself "orchestrated a coverup." The letter also noted that, along with Ranking Member Pat Toomey, they are prepared to subpoena the FTX founder to compel his testimony.

Resources:

The Senate Banking Committee Letter

CNBC

Nick Percoco

See flow at unusualwhales.com/flow.