The United States Securities and Exchange Commission is investigating Sam Bankman-Fried (SBF), the CEO of embattled crypto exchange FTX, to determine whether he broke securities laws, Bloomberg reported on Friday, citing a person familiar with the matter.
Separately, the regulator is already reportedly investigating FTX over alleged mishandled customer funds which led to a liquidity crunch on its platform.
SEC Investigates FTX CEO
According to the latest Bloomberg report, the SEC is scrutinizing SBF’s involvement in recent moves that helped push FTX into a liquidity crisis.
Per recent reports, SBF transferred at least $4 billion from FTX, including customer funds, to Alameda Research to prop the firm up after it had suffered losses in May and June this year. This could be one of the reasons the CEO is being investigated.
SEC Expands Investigation Into FTX
The securities watchdog probe into FTX started months ago but has expanded in recent days following the company’s recent troubles. The latest probe into SBF predates the SEC investigation into FTX over whether customer funds were being mishandled by its management.
Aside from the SEC, FTX is also currently being scrutinized by other major state and federal regulators in the United States since its liquidity crunch began. Just recently, the U.S. Department of Justice (DOJ) launched an investigation into FTX over possible fraud.
The exchange is being investigated by the Commodity Futures Trading Commission (CFTC) as well.
Binance Backs Out of FTX Deal Over Regulatory Probes
All of this contributed to Binance’s recent decision to back out from its agreement to acquire FTX.
On Tuesday, Binance CEO Changpeng Zhao (CZ) announced that the company had signed a non-binding letter of intent (LOI) to acquire FTX and provide liquidity for the latter’s customers. However, Binance later revealed that it would no longer pursue the acquisition due to “latest news reports regarding mishandled customer funds and alleged US agency investigations.”
Meanwhile, after a deal to sell itself to Binance fell through, FTX is reportedly planning to raise about $9.4 billion from investors and rivals to solve its liquidity issues.
Your crypto deserves the best security. Get a Ledger hardware wallet for just $79!