US senators call for crypto supervision after FTX collapse

Leading senators will introduce bipartisan legislation to close money-laundering loopholes

Sam Bankman-Fried, former CEO of cryptocurrency exchange FTX, after his arrest in the Bahamas. Reuters
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US senator Elizabeth Warren has said it is time for Congress to force cryptocurrency companies to follow the same anti-money laundering rules as other financial institutions.

The influential Democratic figure was speaking during a congressional hearing on Wednesday investigating the collapse of crypto exchange FTX.

“Crypto has become the preferred tool for terrorists, for ransomware gangs, for drug dealers and for rogue states that want to launder money,” Ms Warren said.

"It is time for Congress to make the crypto industry follow the same money-laundering rules as everyone else.”

Ms Warren said she and Republican senator Roger Marshall would introduce bipartisan legislation to close crypto money-laundering loopholes.

Other politicians opposed the criticism levied against cryptocurrencies, saying the industry should not be punished for the alleged crimes of FTX co-founder Sam Bankman-Fried and his companies.

US authorities have accused Mr Bankman-Fried of a series of crimes, including money laundering and fraud. He has been charged with misusing billions of dollars in customers’ funds before last month’s spectacular collapse of his cryptocurrency empire.

The charges capped a stunning fall from grace for Mr Bankman-Fried, 30, who was arrested in the Bahamas on Monday.

He had amassed a fortune valued at more than $20 billion as he rode a cryptocurrency boom to build FTX into one of the world's largest exchanges.

Its abrupt collapse pushed Bitcoin and other crypto assets to plunge in value, although they have since recouped some of those losses.

A judge in the Bahamas on Monday denied bail for Mr Bankman-Fried, saying he was a significant flight risk.

FTX founder Sam Bankman-Fried is led away in handcuffs by officers of the Royal Bahamas Police Force in Nassau, Bahamas. AFP

His lawyer had proposed that his client pay $250,000 cash and wear a tracking device.

The US legal team has refused to give liquidators appointed by a Bahamian court access to computer systems.

The lawyers said the Bahamas colluded with Mr Bankman-Fried and his co-founder, Gary Wang, to wrongly access FTX’s system last month.

An extradition hearing for Mr Bankman-Fried was set for February 8.

News agencies contributed to this report.

Updated: December 14, 2022, 7:29 PM