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On the heels of FTX’s collapse, Bloomberg reported that the exchange had been the subject of an investigation by U.S. federal prosecutors long before its downfall.
Reportedly, the U.S. Attorney’s Office for the Southern District of New York spent several months probing FTX’s operations and its U.S. and offshore arms. U.S. attorney Damian Williams has been named as the key figure in this investigation. His investigation’s primary focus was ensuring compliance with the Bank Secrecy Act.
Bloomberg stated that the “authorities have used the law, requiring financial institutions to take steps to prevent money laundering and terrorism financing,” however, the Bahamas-based exchange said it complies with the Act.
For the uninitiated, crypto exchange FTX was one of the most trusted names until it plummeted earlier this month, following reports of the misuse of billions of dollars in customer assets, prompting the exchange to file for Chapter 11 bankruptcy.
The controversy shook the market and tremors were felt by several crypto firms, who are bracing for a fallout from the collapse of the former billionaire founder Sam Bankman-Fried’s crypto empire, FTX.
In the wake of this devastation, prosecutors and regulars including the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are seeking help from the new FTX CEO, John Ray III, who is taking over the company’s bankruptcy proceedings and is navigating what he identified as “a complete absence of trustworthy financial information.”
However, it is unknown what the investigation unraveled prior to the company’s collapse. Furthermore, the report stated that the bankruptcy and its impact on the market “put the federal investigation into a new trajectory.”