US Regulators Probing FTX Handling of Customer Funds: Bloomberg

FTX chief Sam Bankman-Fried denied customer funds were being re-invested in a now deleted tweet posted on Monday.

AccessTimeIconNov 9, 2022 at 5:51 p.m. UTC
Updated Nov 9, 2022 at 6:42 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

U.S. securities and commodities regulators are probing whether FTX.com correctly managed client funds, despite statements this week by the ailing crypto exchange’s CEO, Sam Bankman-Fried, that all customer holdings were covered, according to sources cited by Bloomberg Wednesday.

The inquiries by the Securities and Exchange Commission and Commodity Futures Trading Commission date back several months and started as a probe into the crypto lending activities of FTX's U.S. counterpart, FTX US. But the investigations are related to the issues that have caused FTX's current liquidity crisis and look at the relationship between FTX.com, its trading house Alameda Research and FTX US, according to Bloomberg's report.

On Tuesday, rival exchange Binance said it was planning to buy the non-U.S. business of FTX, citing a “severe liquidity crunch,” but there are now indications a review of FTX’s books has led to a change of heart on Binance's part.

In a tweet posted Monday and subsequently deleted, Bankman-Fried said his company “has enough to cover all client holdings.”

“We don’t invest client assets,” he said, in an apparent bid to stave off a bank run. “FTX is fine. Assets are fine.”

Last week, CoinDesk revealed that Alameda and FTX were more closely linked than had been thought, with much of Alameda’s balance sheet assets in the form of FTX’s token, FTT.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.