US DOJ And SEC Allegedly Probing FTX’s Collapse
According to reports, officials of the US DOJ (Department of Justice) have collaborated with the US SEC (Securities and Exchange Commission). Both entities are reportedly investigating FTX and what led to the recent crisis.
This week has been chaotic for the crypto community as two crypto exchanges battle it out. Unfortunately, the FTX-Binance saga has done more harm than good to the crypto market.
Insider reports revealed that the US SEC and DOJ are evaluating the recent FTX debacle. Due to its current financial woes, the crypto exchange has come under the regulator’s radar.
Meanwhile, this is not the first time the crypto firm has come under scrutiny. Previously, state officials investigated whether FTX American users were trading derivatives assets.
FTX and FTX.US had not registered with the necessary federal authorities. Hence, the exchange cannot offer derivative trading services to Americans.
Similarly, the SEC and CFTC (Commodity Futures Trading Commission) also examined FTX. Again, the aim was to ascertain how the exchange kept investors’ funds.
However, the liquidation is a reason for the latest investigation. Previously, Binance said it would buy FTX.com to help pull the company from its crisis.
However, Changpeng Zhao, the CEO of Binance, tweeted that Binance was pulling out of the deal. According to Zhao, Binance decided to pull out after due diligence.
“Initially, we hoped to help FTX with its liquidity issue. However, the issue is beyond us,” the report stated.
FTX Working With Tron Founder After Binance Fallout
On November 10th, reports reveal that Sam Bankman-Fried, FTX’s CEO, is considering other options to bail out the company. The CEO shared a Slack message with his staff.
According to the message, Bankman-Fried wants to raise funds for the exchange. FTX will use the funds to pay its users and then its workers.
Meanwhile, Tron’s founder, Justin Sun, tweeted on Thursday that he is currently in talks with FTX. Both individuals are working on a solution to solve FTX’s liquidity issue.
Moreover, Bankman-Fried retweeted Sun’s tweet. This shows Sun’s tweet was not a hoax. According to Bankman-Fried’s Slack message, the raise may lead to a fusion of FTX.US and FTX International.
Apart from the possible fundraising, the FTX CEO is yet to provide full details of what happened. He would also have to decide on new management and leadership structure.
The CEO encouraged the exchange staff to stay put during these trying times. However, he added that they could leave the organization if they wished. Users had been initiating withdrawals on the platform, causing withdrawals to slow down.
As a result, FTX paused withdrawals. However, FTX is online, while Alameda Research’s site is private.
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