The U.S. Securities and Exchange Commission (SEC) is examining whether investors in bankrupt crypto exchange FTX correctly followed due diligence procedures, Reuters reported on Thursday, citing two people familiar with the inquiry.
In December, the SEC charged former FTX chief Sam Bankman-Fried with scheming to defraud equity investors who stumped up over $1.8 billion for the company – but is also probing whether those companies did their homework to ensure the investment was sound, the report said.
The report did not name which companies were under investigation, and the probe does not indicate wrongdoing but will focus on whether the companies fulfilled their fiduciary duty to their own investors, Reuters said.
The collapse of FTX, which filed for Chapter 11 bankruptcy protection on Nov. 11, has led to a slew of legal cases. Bankman-Fried has also been charged by the U.S. Commodity Futures Trading Commission and Department of Justice, and pleaded not guilty to money laundering and wire fraud in a New York court on Tuesday.
The battle to wind the company up has also led to a multiple legal claims over who actually owns various assets, including luxury Bahamas properties and $450 million in Robinhood shares. New FTX Chief Executive Officer John Ray has said governance and record-keeping at the company was the worst he ever saw in his 40-year career.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups 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, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.