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Crypto: ‘Crypto is a garden of snakes,’ Democrat says as Congress probes FTX fallout

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The cryptocurrency industry is coming under some heavy fire in Congress on Tuesday in the wake of the arrest of Sam Bankman-Fried, with one House Democrat charging that the FTX founder isn’t just a one-off.

“My fear is that we’ll view Sam Bankman-Fried as just one big snake in a crypto Garden of Eden. The fact is, crypto is a garden of snakes,” said Rep. Brad Sherman, a California Democrat, at a hearing of the House Financial Services Committee.

Sherman is a known critic of cryptocurrencies, and his comments came at a hearing at which Bankman-Fried was due to appear. The FTX founder is alleged to have stolen from FTX customers and lied to investors about using deposits to bankroll risky bets by his Alameda hedge fund, as MarketWatch has reported. He was arrested Monday in the Bahamas.

Read: Sam Bankman-Fried’s empire of deception laid bare in U.S. government charges alleging massive FTX fraud

FTX’s failure has prodded lawmakers to consider a host of proposals for regulating the industry, even as Securities and Exchange Commission Chairman Gary Gensler says his agency has the tools it needs. Sherman was critical of handing oversight of the industry to the Commodity Futures Trading Commission, as some lawmakers want to do.

Rep. Patrick McHenry, the North Carolina Republican who will lead the Financial Services Committee in the next Congress, promised Tuesday to call Gensler for testimony “early and often” next year, even as he said he believes in the promise of digital assets.

FTX’s current CEO, John J. Ray III, said regulations aren’t his area of expertise, but spoke generally when questioned about next steps for the industry.

Also see: These are the 5 most damning things FTX’s new CEO has to say about Sam Bankman-Fried

“You need records, you need controls and you need to segregate people’s money,” he said.

Meanwhile, Bankman-Fried’s attorney, Mark Cohen, said in a statement that his client “is reviewing the charges with his legal team and considering all of his legal options.”

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