The US government has requested an independent investigation into FTX’s bankruptcy to investigate fraud, dishonesty, and incompetence claims at the failing cryptocurrency exchange.
The US Department of Justice requested that a government inspector be appointed to examine FTX’s bankruptcy case. This would “investigate serious and substantial allegations of fraud”.
This request by the Department of Justice is part of multiple regulatory and police inquiries regarding the collapse of the company, a digital currency exchange that was founded by Sam Bankman-Fried (30 years old). It costs $32bn (PS25bn).
Mr Bankman-Fried was accused of using customer funds to fund losses at Alameda Research, a high-risk hedge fund.
Andrew Vara of the Office of the United States Trustee stated that an official investigation would answer “larger questions about the basic facts of these cases.” Is this a failed business or a fraud?
I'm not like Bernie Madoff', claims FTX founder Sam Bankman-Fried "I expect I'm gonna have nothing at the end of this." Remember Tens of thousands of British traders have been left out of pocket by the implosion of the cryptocurrency exchange.pic.twitter.com/Aq08HK9z7p
— Share_Talk ™ (@Share_Talk) December 1, 2022
On Thursday, Mr Bankman Fried conducted a series of interviews where he denied wrongdoing. He also avoided comparisons with Bernie Madoff’s $65bn Ponzi scheme.
On Thursday, he stated that he wasn’t wasting any effort or time trying to manage the risk of FTX.
The implosion at FTX has caused shockwaves in the cryptocurrency space, and panicked investors tried to withdraw funds from other exchanges.
FTX and a network of 130 companies related to it collapsed on November 11, with an $8bn hole in its accounts. John Jay Ray, an experienced veteran who managed Enron’s bankruptcy in 2001, is handling its restructuring.
According to a court filing, Ray stated that FTX was run by “a small group of inexperienced and unsophisticated individuals.” Mr Ray claimed that the case was worse than Enron’s.
He said: “Never in all my career have I seen such a complete failure to corporate controls and such an absence of trustworthy financial data as this.”
