(Reuters) – New York U.S. Attorneys are looking into the collapse of FTX after the cryptocurrency collapsed, a source with knowledge of the investigation said. The exchange filed for Chapter 11 bankruptcy protection last week following a wave of customer withdrawals.
The DOJ, SEC, and CFTC are all now investigating how FTX handles client funds, as FTX CEO Sam’s proprietary trading firm, Alameda Research Bankman-Fried, unraveled, sources said. After backing Alameda with client funds, FTX faced a significant liquidity crunch.
The SEC probe also targets FTX executives’ handling of client money at the company and any possible violations of securities laws, a second source said.
The US Attorney’s Office in Manhattan, the SEC and the CFTC all declined to comment.
FTX did not immediately respond to a request for comment.
FTX is now facing scrutiny from U.S. regulators over its handling of client funds, as well as its crypto lending activities, following the failure of a bailout deal with rival exchange Binance.
Reuters reported last week that at least $1 billion in client funds had disappeared from FTX, citing sources.
The demise of FTX marks the latest turmoil in the cryptocurrency industry this year. The entire cryptocurrency market has slumped amid a string of crashes that have wiped out other major players, including Voyager Digital and Celsius Network.