FTX collapse: US authorities are said to have approached investors for information on FTX, Sam Bankman-Fried

news7f12/02/2022

1 1 minute read

FTX Crypto Exchange, CEO Sam Bankman-Fried Face Securities Violations Probe in Texas

US authorities are asking crypto investors and trading companies that work closely with FTX to provide information about the company and its key figures including Sam Bankman-Fried and Caroline Ellison, Bloomberg News reported on Thursday.

The United States Attorney’s Office for the Southern District of New York recently sent out a series of requests, asking recipients to provide information on the list. FTX employees and associates, the report said, citing people familiar with the incident.

Attorney from the United States Securities and Exchange Commission Enforcement has also sent similar requests for information to companies that have invested in or traded on FTX, the report added.

According to the report, the regulator is trying to better understand what FTX representatives have told investors and whether any misrepresentation was made in violation of securities laws.

The US Department of Justice’s bankruptcy watchdog earlier on Thursday called for an independent investigation into the collapse of crypto exchange FTX.

Sam Bankman-Fried, 30 years old, founded FTX in 2019 and runs electronic money exploded into a net worth that Forbes pegged a year ago at $26.5 billion (about Rs 2,16,560). Bankman-Fried resigned as chief executive of FTX the same day the company filed for bankruptcy.

The liquidity crunch came after Bankman-Fried secretly transferred $10 billion (about Rs 81,700) in FTX client funds to its proprietary trading firm, Alameda Research, Reuters reported, citing two acquaintances related to this issue.

The fall of FTX will be considered in several congressional hearings this month, with the House Financial Services Committee set to hold the first of a series of meetings on December 13.

Last month, FTX’s newly appointed CEO, John Ray, said in a US court filing that there are shortcomings in regulatory oversight and the company’s lack of control over the exchange. A bankrupt cryptocurrency exchange founded by Sam Bankman-Fried.

The US Attorney’s Office for SDNY, SEC, FTX and Caroline Ellison did not immediately respond to Reuters’ requests for comment. Bankman-Fried could not be reached immediately.

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