U.S. Sen. Tommy Tuberville (R-Auburn) questioned the liability some major Environmental, Social, and Governance (ESG) rating companies might have for giving crypto exchange FTX "high marks, very high marks for corporate governance" before its recent collapse.
The United States Senate Committee on Agriculture, Nutrition and Forestry heard about the FTX collapse and possible crypto regulation ideas from Rostin Behnam, chairman of the Commodity Futures Trading Commission, on Thursday.
Tuberville said at the meeting that "we have since learned that the exact opposite was true" regarding FTX's corporate governance and asked Behnam about what could be done legislatively to protect investors from inaccurate reporting by ESG rating companies.
"To the extent that the issue you raise is a significant problem and one that crypto firms are getting ESG-related ratings, then I think it's something we should talk about further," Behnam said. "This goes to the heart of disclosures and customer information."
Tuberville said at the hearing that "you've got to have rules, and we've all seen this coming."
"I've invested in crypto," Tuberville said. "I didn't get as deep as some of these people have gotten, but it is a mess, and it's going to get worse if we don't get control of it, but we've got confidence that you will with our help."
According to CoinDesk, Sam Bankman-Fried, founder and former CEO of FTX, is currently being investigated by the Justice Department, the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and others.
Multiple outlets in November reported at least $1 billion to $2 billion of customer funds "vanished" from the exchange during the crash in November. FTX filed for bankruptcy in November.
"It's a huge problem," Tuberville said at the hearing on Thursday. "I've got people calling me from everywhere going, "What are we going to do? What are we going to do about this?" Well, it's new. It's totally new, and you go through some hard times. Unfortunately, you've got a lot of people that have lost money in this, but we've got to get control of it so people will get confidence in digital currency. Bottom line."
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