US Prosecutors Began Investigating FTX Months Before Its Collapse

FTX was on the radar of federal prosecutors in Manhattan months before the crypto exchange’s collapse, Bloomberg News reported Monday citing people familiar with the investigation. The U.S. Attorney’s Office for the Southern District of New York spent months working on a major investigation into U.S.-armed and offshore cryptocurrency platforms including the operations of a major FTX exchange, the report said.

A representative of the concerned US Attorney’s Office declined to comment on the matter, and FTX did not immediately respond.

The listing of FTX has spread turmoil across the industry, causing firms to lose money with exposure to what was once the world’s largest crypto exchange, prompting investigations by regulators in several countries. It sparked fears about the future of the crypto industry after FTX described a “major liquidity crisis”.

Earlier this month, FTX filed for US bankruptcy protection and its founder Sam Bankman-Fried resigned as CEO, after rival exchange Binance pulled out of a proposed acquisition.

Several crypto firms have since watched FTX collapse, with many counting their exposure in the millions on the heavy trade.

On Monday, Bank of England Deputy Governor Jon Cunliffe said the inclusion of FTX shows the need to bring the crypto world within a regulatory framework.

“Although the crypto world, as demonstrated during the crypto winter last year and last week’s FTX implosion, is not yet large enough or connected enough to mainstream currencies to threaten the stability of the financial system, its links with mainstream finance have developed rapidly, said Cunliffe.

He said FTX’s problems highlight the need for regulators to put in place tighter controls as soon as possible, adding that the BoE will launch a public consultation to issue regulations for stablecoins detailing how coin holders make claims against the issuer as well. they must be arranged to deliver redemptions in accordance with commercial bank funds.

© Thomson Reuters 2022

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