US House committee leadership threatens to subpoena SEC over FTX docs

Patrick McHenry led efforts starting in February to obtain communication records between SEC and Justice Department staff over the arrest of Sam Bankman-Fried.

Rep. Patrick McHenry, who chairs the United States House Financial Services Committee, has suggested that he may try to subpoena the Securities and Exchange Commission (SEC) over documents related to former FTX CEO Sam Bankman-Fried, or SBF.

In a Sept. 27 hearing on oversight of the commission, McHenry claimed chair SEC Gary Gensler had made efforts to “choke off the digital asset ecosystem” in addition to “refus[ing] to be transparent with Congress” in aconnections between the commission, FTX and SBF. The committee chair said the government body had “made multiple requests” for documents regarding the timing of SBF’s arrest given a previously scheduled appearance before Congress.

“Seven months later, the committee has not received a single non-public document that was not part of a [Freedom of Information Act] production,” said McHenry. “As I said, our patience is wearing thin […] I do not want to be the first chairman of this committee to issue a subpoena to the Securities and Exchange Commission.”

In February, the committee leadership under McHenry requested the SEC provide documents related to communications between its staff as well as the Justice Department regarding charges filed against Bankman-Fried. McHenry renewed the request in April and May, after claiming the SEC had only provided publicly available information.

While McHenry’s opening statement at the hearing focused on digital assets and oversight, ranking member Maxine Waters expressed concerns about how a potential shutdown of the U.S. government could affect the SEC’s capabilities. Gensler said that if U.S. lawmakers were unable to reach an agreement on government spending by Sept. 30, roughly 92-93% of SEC staff would be furloughed.

Upon questioning from McHenry, Gensler said Bitcoin (BTC) was “not a security” as it didn’t meet the Howie test over what qualifies as an investment contract. The SEC chair comments seemed to affirm the same position on BTC he took during his time as professor with the Massachusetts Institute of Technology in 2018.