What happened to the FTX exchange seems to have caught the attention of regulators. According to reports, the US Department of Justice is investigating FTX. Meanwhile, Binance CEO made statements about their abandonment of the FTX purchase. In the stock market, large coin transfers draw attention. Here are the details…
US Department of Justice investigates FTX exchange
The US Department of Justice is investigating crypto exchange FTX after its apparent collapse, The Wall Street Journal reported on Wednesday. FTX was already facing investigations from state and federal regulators. However, these investigations gained new attention after it was revealed that the company was experiencing a liquidity problem. Binance agreed to buy the company in a bailout effort. But as we reported as Kriptokoin.com, it withdrew from the deal yesterday. He stated that FTX has concerns about its notebooks.
It soon emerged that Bankman-Fried told investors that FTX needed $8 billion to continue operating. Otherwise, he said he would risk filing for bankruptcy. State regulators have previously been investigating FTX and whether the exchange allows US customers to trade derivatives. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are also investigating whether FTX is properly handling its clients’ funds, Bloomberg reports.
Binance CEO: Sorry
“The issues are beyond our control or our ability to help,” Binance said in a statement Wednesday. The statement also cited “misused client funds” as reasons for withdrawing from the deal. He also pointed to the news about alleged US agency investigations. Changpeng Zhao also said, “Sad day. I tried, but,” he tweeted.
Sam Bankman-Fried, founder and CEO of FTX, has previously tweeted that his company and assets are “good.” The claim was interrupted a day later when Bankman-Fried and Binance CEO Changpeng Zhao announced that Binance had signed a non-binding letter of intent to acquire the company.
Sam Bankman-Fried warns investors of bankruptcy
FTX investors have been warned that the crypto exchange may be forced to file for bankruptcy protection if it doesn’t receive an infusion of cash. The news followed news that Binance had abandoned its earlier promise to buy its troubled trading empire. Bloomberg reported that the FTX exchange is facing an $8 billion deficit.
FTX deposits stopped
Cash-strapped crypto exchange FTX added a new alert to customers on its website FTX.com on Wednesday, warning customers that the exchange is halting withdrawals. The message read, “FTX is currently unable to process withdrawals. We strongly recommend that you do not deposit any money”.
The message emerged after a temporary website outage on Wednesday evening. The website continued to work within minutes, but was shut down again at the time of publication. While FTX US’s website is currently working fine, FTX Ventures’ website went down on Wednesday. The website of Alameda Research, the trading arm founded by FTX CEO Sam Bankman-Fried, has been privatized.
Coin activity drew attention
Meanwhile, Alameda Research withdrew approximately $37 million from FTX in the form of wrapped Bitcoin (wBTC). It is not clear what the reason for the token movements are, and the amount is probably only a fraction of what the firm has. Before the recent crypto markets crash, its balance sheet consisted of at least $14.6 billion in June. However, the decline in transaction data on the Ethereum Blockchain gives the company an anxious look. Crypto market analysts speculate that the trading firm may be seeking liquidity as it tries to meet demands from creditors.
An Alameda-related wallet has withdrawn 2,262 wBTC in four separate transactions within minutes from crypto exchange FTX.US, based on Ethereum Blockchain data from crypto intelligence platform Arkham Intelligence. He then sent 3,000 wBTC tokens worth $50 million to an address called “Wrapped Bitcoin: Controller”. Trading volume for WBTC on FTX.US has been around $10,000 in the last 24 hours. This means that if someone sells a large amount of tokens, there is no market depth in the stock market. FTX.US is a US-based organization for American users, separate from crypto exchange FTX but still part of former billionaire Sam Bankman-Fried’s crypto empire.