FTX Was Under Investigation by Federal Prosecutors

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  • FTX was under investigation from federal prosecutors, according to Bloomberg
  • The exchange was being looked at as having possibly breached the Bank Secrecy Act
  • The SEC and Justice Department was already investigating FTX US

FTX was under investigation by Federal Prosecutors in the months leading up to its collapse, according to Bloomberg. The outlet says the US Attorney’s Office for the Southern District of New York had been looking into possible violations of the Bank Secrecy Act with regards to FTX’s operations, although it isn’t known if any charges would have been forthcoming. The same law is being used to prosecute Kraken for offering accounts to individuals in sanctioned countries.

Investigation Had Been Ongoing for Months

Bloomberg said yesterday that authorities were “poking into FTX’s massive exchange operations” this year after the exchange expanded beyond anyone’s expectations, citing “people familiar with the investigation” as their source. The purpose of the Bank Secrecy Act is to ensure that financial institutions take steps to prevent money laundering and terrorism financing, which of course crypto has a reputation for.

As well as offering accounts to individuals in sanctioned countries, authorities have also gone after crypto platforms that, according to prosecutors, falsely claimed that they don’t serve U.S. customers. FTX’s North American operation, FTX US, was supposed to be the entity that ensured compliance on this front.

Join the Queue

Bloomberg says it is unclear whether prosecutors reached any conclusion in their probe, and with the exchange now having collapsed their investigation has taken on a “new trajectory”. Any investigation by the US Attorney’s Office for the Southern District of New York would be carried out at the same time as an ongoing joint investigation by the Securities and Exchange Commission and Justice Department into FTX US.