The past few days have undoubtedly been dominated by the demise of FTX, one of the largest crypto exchanges in the world. It was of course to be expected, but according to the Wall Street Journal the United States Department of Justice and the United States Securities and Exchange Commission (SEC) has already opened an investigation into FTX.
Research on FTX
The exchange has previously been the subject of all kinds of investigations from American regulators. The SEC had previously targeted FTX because they suspected that FTX.US, the US arm of FTX, had been guilty of breaking securities laws.
However, these ongoing investigations are now of course taking a different turn quite suddenly as a result of the liquidity crisis at FTX and the exchange’s subsequent demise.
According to the WSJ, Justice and the SEC in the United States would work closely together on the investigation. Normally, the Justice Department handles cases involving criminal activity, such as fraud, while the SEC focuses primarily on enforcing certain laws designed to protect investors.
Gary Gensler, the chairman of the SEC, spoke yesterday at the Healthy Markets Association Here’s what to say about the FTX situation:
“We will continue to do our job as a tailor-made agent. The runway is getting shorter for some of these middlemen, I must say.”
FTX is called on the mat
As part of the extensive investigation, SEC officials have reached out to lawyers for FTX to request more documents regarding the relationship between FTX.US and its parent company, which is based in the Bahamas. They also sought information about ties between FTX and founder Sam Bankman-Fried’s trading company, Alameda Research.
The SEC and the CTFC are also investigating whether FTX has handled users’ funds correctly. There are, of course, big question marks about this at the moment.