If you thought the FTX debacle was winding down, buckle up. Only hours after former billionaire CEO Sam Bankman-Fried stepped down from the company as it filed for bankruptcy on Friday, a suspected hack drained hundreds of millions of dollars worth of crypto assets from customer accounts. The overnight attack, coupled with the bankruptcy, severely damages whatever chance the Bahamas-based exchange’s users have at recovering assets that have been frozen on the platform since Tuesday. “We have been in contact with, and are coordinating with law enforcement and relevant regulators,” the company’s new CEO and chief restructuring officer John Ray III said in a statement. So, what does this mean for Washington? The chaos caused by FTX’s bankruptcy has completely upended crypto policy battles that have been going on for more than a year. Most immediately, the plan by Senate Agriculture Chair Debbie Stabenow (D-Mich.) and Sen. John Boozman (R-Ark.) to to give the Commodity Futures Trading Commission oversight of crypto exchanges is going to face stiff opposition from consumer groups and crypto industry lobbyists who have hammered the measure as an example of Bankman-Fried’s influence with Washington policymakers . Bankman-Fried had been one of the bill’s biggest champions and as more digital asset startups fall under the weight of FTX’s collapse, lawmakers will face pressure to reassess their approach to crypto, according to multiple sources on the Hill. “Efforts by billionaire crypto bros to deter meaningful legislation by flooding Washington with millions of dollars in campaign contributions and lobbying spending have been effective,” said Rep. Brad Sherman (D-Calif.) – a major crypto skeptic – said in a statement on Sunday. And while Bankman-Fried’s political largess mostly benefited Democrats, Sherman noted that Ryan Salame, another top FTX expected, spent millions backing Republican candidates during the midterms. Meanwhile, Washington insiders are starting to hammer U.S. regulators for failing to protect investors from FTX’s calamity. Better Markets CEO Dennis Kelleher on Sunday issued a statement blasting the CFTC – which until Friday had been weighing FTX’s controversial proposal to let retail investors use borrowed money to trade crypto — for acting as a “a crypto cheerleader in an attempt to expand its jurisdiction .” “The events of the last week demonstrate the need for Congressional action," CFTC spokesman Steven Adamske said in a statement. Top Republicans, including the Senate Banking Committee’s ranking Republican Sen. Pat Toomey of Pennsylvania, are sharpening their knives for the Securities and Exchange Commission — pinning the disaster on the agency’s unwillingness to work with industry. “These failures have driven crypto development to foreign jurisdictions that have little or insufficient regulation. We’re now seeing the consequences in the failure of [FTX],” Toomey said in a series of Twitter posts late Friday. SEC Chair Gary Gensler has argued that the industry has been highly resistant to his agency’s guidance. “This is a field that's significantly non-compliant,” Gensler said in an appearance on CNBC last week. Those were hardly the only FTX developments. — Bankman-Fried was questioned by police and securities regulators in the Bahamas in connection to a criminal misconduct probe, according to Bloomberg’s Katanga Johnson . — FTX on Sunday mysteriously released roughly $400 million in FTT — an FTX-native token that was at the heart of the trading scandal that destroyed Bankman-Fried’s investment empire — sparking more fears of illicit activity . — Our Declan Harty: “California regulators on Friday said they suspended crypto startup BlockFi from operating in the state after it paused client withdrawals amid the digital asset crash triggered by the FTX meltdown” — Bloomberg’s Yueqi Yang: “A breakdown of the balance sheet of Sam Bankman-Fried’s exchange shared with investors a day before its bankruptcy filing shows that it had nearly $9 billion in liabilities and $900 million in liquid assets, $5.5 billion in “less liquid” assets, and $3.2 billion in “illiquid” assets … Most of the biggest holdings, including lower-profile cryptocurrencies Serum, Solana and FTT, have since plunged in value .” — Miami-Dade County and the Miami Heat announced they would terminate FTX’s $135 million NBA stadium naming rights deal. IT’S MONDAY — And it’s a jam-packed week in Washington. Send us your tips, story ideas or feedback before you log off for the weekend: kdavidson@politico.com and ssutton@politico.com .
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