FTX files of cryptocurrency exchanges for bankruptcy

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Multi-billion dollar crypto exchange FTX is seeking bankruptcy protection following its bankruptcy this week.

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FTX and its CEO and founder Sam Bankman-Fried are under investigation by the Department of Justice and the Securities and Exchange Commission to determine whether criminal conduct or securities crimes have taken place. He told the Associated Press on condition of anonymity that he could not discuss the details publicly.

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The investigation focused on the possibility that the bank used customer deposits to fund the bets of Alameda Research, a Bankman-Fried hedge fund. In traditional markets, brokers are expected to segregate client funds from the assets of other companies. Violations may be penalized by regulatory authorities.

FTX agreed to sell to bigger rival Binance after experiencing the cryptocurrency’s equivalent of a bank run earlier this week. Customers who worried whether FTX had enough capital fled the exchange.

The cryptocurrency industry hoped that Binance, the world’s largest cryptocurrency exchange, could save FTX and its depositors. But after Binance got a chance to see his FTX book, it became clear that the smaller exchange’s problems were too big to solve.