Troubled cryptocurrency exchange FTX investigated by US regulators for customer funds • TechCrunch

Cryptocurrency trading giant FTX fell out of favor this week after the exchange experienced a liquidity crunch and agreed to give rival Binance the option to buy the company’s operations outside the US in what appears to be a ransom. Now, US regulators are investigating whether FTX potentially mishandled client funds on its platform, the sources told Bloomberg.

In addition to the liquidity crisis itself, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating FTX’s relationship with its sister entity Alameda Research, as well as with FTX US. The investigations, which have not been publicly disclosed, began “months ago as an investigation into FTX US and its crypto lending activities,” Bloomberg reported.

Alameda Research, a crypto trading firm run by FTX boss Sam Bankman-Fried, found itself in the eye of the storm this week when its leaked balance sheet financials revealed unusually close ties to FTX via the crypto-native FTT token. exchange. Changpeng Zhao, CEO of Binance, sent shockwaves through the cryptoverse when he tweeted that his company, an early investor in FTX and a large holder of its tokens, would liquidate his position in FTT.

Since that series of tweets, FTT holders have been selling off their tokens en masse. Zhao claims that Bankman-Fried then called him and asked Binance to bail out the troubled exchange.

Binance and FTX revealed yesterday that the former had signed a non-binding letter of intent giving it the option to purchase FTX pending due diligence. At this time, it is unclear whether the deal will go ahead due to alleged concerns raised during the due diligence process.

Leave a Comment