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SEC Investigates Due Diligence Conducted By Investors In Bankrupt Crypto Exchange FTX

Benzinga · 01/06/2023 11:07

The U.S. Securities and Exchange Commission (SEC) is seeking information about the due diligence conducted by investors in FTX, Reuters reported citing unnamed sources.

The SEC has already brought charges against three top executives of the bankrupt crypto firm, which allegedly defrauded investors.

The regulator wants financial firms about the policies and procedures they have in place for conducting due diligence and whether these were followed when investing in FTX.

Also read: Liquidators Subpoena Founders Of Failed Crypto Hedge Fund Three Arrows Capital Via Twitter

It is unclear how many firms are receiving such inquiries from the SEC.

The regulator has alleged that the Bahamas-based exchange raised more than $1.8 billion from equity investors, including 90 U.S.-based investors, since May 2019.

Venture capital firms and investment funds that invested in FTX may face regulatory scrutiny as well.

On Nov. 11, FTX filed for Chapter 11 bankruptcy, leading to a number of legal cases.

FTX founder Sam Bankman-Fried was charged by the U.S. Commodity Futures Trading Commission and Department of Justice with money laundering and wire fraud.

He pleaded not guilty in a New York court on Tuesday.

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