Paxos Ordered by US Officials to Freeze $19M in Crypto Tied to FTX

Federal law enforcement asked the crypto issuer to freeze assets associated with four ether addresses as investigations into FTX collapse intensify.

AccessTimeIconNov 14, 2022 at 3:20 p.m. UTC
Updated Nov 14, 2022 at 3:54 p.m. UTC

U.S. federal authorities have ordered cryptocurrency issuer Paxos to freeze $19 million worth of crypto tied to the bankrupt FTX exchange, the company announced on Saturday.

The order comes after the U.S. Justice Department launched an investigation into the rapid collapse of Sam Bankman-Fried's crypto empire last week. The run on the multibillion-dollar exchange occurred over just a few days, culminating in a bankruptcy filing in the U.S. on Friday.

By last Thursday, U.S. regulators and the Justice Department had already contacted rival crypto exchange Binance for information about its interactions with FTX. Binance had previously announced it would possibly acquire the ailing exchange, but less than 24 hours later backtracked on the tentative deal after it examined FTX's finances.

"Earlier today, Paxos received direction from U.S. federal law enforcement to freeze Paxos-issued assets associated with four ethereum addresses," Paxos said in its statement on Saturday.

In response to the request, Paxos said it froze 11,184.38 PAXG tokens that had been on the platform, but had since been moved to unknown wallet addresses over a 24-hour period.

"This is a rapidly evolving matter. We intend to provide updates as appropriate as details come to light," the company's statement said.


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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.