The collapse of FTX is already attracting the attention of US regulators, who are now reportedly looking into whether the firm mishandled customer funds. The investigation is starting as people in the community are beginning to wonder where CEO Sam Bankman-Fried is.
Citing two people “familiar with the matter,” a new Bloomberg report said regulators are already asking for details about the ownership structure of FTX’s American branch, FTX US, and the international trading venue FTX.com.
The regulators are reportedly interested in any overlap in management or board members between the two companies, which were described by FTX as two distinct and separate entities.
According to Bloomberg’s sources, regulators have asked for details on how customer accounts were managed by the two entities under the FTX brand, and whether user accounts were properly segregated. Notably, this comes in addition to a closer scrutiny into the ties between FTX and Bankman-Fried’s now-infamous trading firm Alameda Research.
Meanwhile, Sam Bankman-Fried’s exact whereabouts remain unclear, although it has been reported that he resides in the Bahamas where FTX’s global headquarters is located. Still, just days before FTX stopped processing customer withdrawal requests, the exchange’s official Twitter account posted a now-deleted video showing the view from the company’s new office in Miami, Florida.
Im other words, whether Bankman-Fried is currently in Florida, the Bahamas, or somewhere else remains unclear at this point.
Regulators have repeatedly warned about crypto firms
The investigation into FTX’s dealings is reportedly led by the Securities and Exchange Commission (SEC) and the derivatives-focused Commodity Futures Trading Commission (CFTC).
In the past, SEC Chair Gary Gensler has warned about crypto risks, and in particular risks related to crypto exchanges. He has also indicated that some exchanges may be in violation of securities laws by offering tokens that are deemed unregistered securities to American retail clients.
Perhaps the strongest warning from Gensler so far came during a hearing in the US Senate Committee on Banking, Housing, and Urban Affairs, where Gensler used strong words to attack the crypto industry:
“Frankly, at this time, [crypto is] more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications.”
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