US authorities asking FTX investors for information on crypto exchange and Bankman-Fried

NEW YORK – The United States authorities are asking crypto investors and trading firms that worked closely with FTX to hand over information on the company and its key figures, including founder Sam Bankman-Fried and the former head of his Alameda Research investment arm, Ms Caroline Ellison.

The US Attorney’s Office for the Southern District of New York recently sent out a slew of requests, asking recipients to voluntarily hand over information on a list of FTX employees and associates, according to people familiar with the case.

Recipients include firms that frequently traded on FTX and may have had conversations with platform executives or hold other information that might help the criminal investigation, the people said. Such requests are often used to start tapping potential sources of information held by witnesses, investors or customers without seeking grand jury subpoenas.

Attorneys from the US Securities and Exchange Commission’s (SEC) enforcement division, which is running a parallel civil probe into the exchange operator’s collapse, sent similar requests for information to companies that invested in or traded on the crypto platform, people familiar with those inquiries said.

The agency is seeking to learn more about the relationships those companies had with the former crypto giant, as well as communications with former top brass at FTX and Alameda, including Mr Bankman-Fried and Ms Ellison, the people said.

The SEC is also trying to get a better sense of what FTX representatives told investors and whether any misrepresentations were made that would violate securities laws, the people said. 

The moves show that the authorities are casting a wide net as they embark on their

investigations into FTX’s collapse

, examining what the company and its leaders told investors and customers as the exchange imploded last month. So far, the authorities have not accused anyone of wrongdoing.

Representatives for New York prosecutors and the SEC declined to comment. FTX and Mr Sam Bankman-Fried did not immediately respond to requests for comment.

Galaxy Digital chief executive officer Mike Novogratz, whose crypto financial services firm disclosed a US$76.8 million (S$104 million) exposure to FTX, acknowledged in a Bloomberg Television interview on Thursday that the authorities have been getting in touch with firms that had interactions with FTX. 

“Regulators have some egg on their face,” he said. “Sam was very far along at pitching to be the cash Bitcoin market here in the US, both with the SEC and Commodity Futures Trading Commission.”

Separately, the US Justice Department’s bankruptcy watchdog is calling for an independent probe into the collapse of FTX Group, saying a neutral party should investigate the cryptocurrency empire’s downfall.

The US Trustee, part of the Justice Department that oversees the bankruptcy court, has asked FTX’s bankruptcy judge to appoint an examiner in the company’s insolvency proceedings. The examiner would publish a public report on FTX’s implosion and look into allegations of wrongdoing.

Examiners are sometimes appointed in large, contentious US bankruptcies when a judge deems them necessary. After Lehman Brothers went bust, for example, an examiner eventually published a report explaining what went wrong. An examiner is also looking into the downfall of crypto lender Celsius Network.

While the company’s new management has done “valuable preliminary work” untangling FTX’s myriad problems, “the questions at stake here are simply too large and too important to be left to an internal investigation”, lawyers for the US Trustee said in court papers. BLOOMBERG