- The U.S. Justice Department is investigating the FTX crisis, according to a Wall Street Journal report.
- FTX customer investments are also under investigation by the SEC and the CFTC.
- Even with the looming troubles, FTX CEO Sam Bankman-Fried earlier maintained that the firm is fine.
- Many in the crypto community have criticized the exchange’s dealings during the ongoing controversy.
As per an emerging report from the Wall Street Journal, the U.S. Department of Justice is investigating the crisis that has befallen FTX US after reports indicated that the firm had liquidity issues.
On top of that, the Securities and Exchange Commission (SEC), alongside the Commodity Futures Trading Commission (CFTC), is looking into the management of FTX customers’ investments, as there were allegations against FTX regarding the mismanagement of investors’ funds.
In the past, state regulators have investigated whether FTX offered derivatives to customers in the U.S. through FTX or FTX.US. Notably, FTX.US is their cryptocurrency exchange subsidiary in the U.S and is registered with regulators at the federal level.
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On Wednesday, FTX CEO Sam Bankman-Fried reportedly told investors that the crypto exchange needs $8 billion to continue operations and avoid bankruptcy. This came to light a few moments after Binance called off the FTX acquisition deal.
Earlier, despite the looming troubles, the FTX CEO maintained that the firm was fine, just like the assets under its care. However, the position seemed shaky as the firm entered into a non-mandatory agreement with Binance for a possible takeover.
Notable Reactions After the FTX Debacle
The ongoing drama involving FTX has sparked reactions from the crypto community, with most criticizing the exchange’s dealings. Many of these reactions highlight FTX’s current crisis, which is causing investors to be disappointed.
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A Twitter user identified as Mayne lamented the decision to entrust their funds to FTX. The user described the decision as their “biggest single loss ever by far.”
Tough loss to swallow, I’m slowly coming to terms with it but it is not easy.
— Mayne (@Tradermayne) November 10, 2022
I did a lot of things right in the last 12 months, managed greed, took profits offline.
My mistake was trusting FTX with my trading balance, my biggest single loss ever by far.
I feel demoralized.
Another user, Mohit Sorout, stated he lost a substantial portion of his investment, as 95% was in FTX.
95% funds on ftx. The pain is fucking real.
— Mohit Sorout 📈 (@singhsoro) November 9, 2022
In addition, James Powell, CEO and co-founder of Kraken exchange, described FTX’s recent damage as “huge” and a “gift” for Bitcoin haters worldwide.
On the Flipside
- Cobie, a Twitter user, reports FTX anticipates a raise from Tron’s Justin Sun to save the exchange after a leaked message from SBF appeared on FTX’s slack platform.
Why You Should Care
As a result of this, along with the ongoing investigation by state and federal regulators, the cryptocurrency exchange has found itself in a crisis. In addition, the recent development will likely prompt regulators to look into the activities of FTX, spelling more doom for the firm.
