DUMPSTER FIRE

Feds Probing Crypto Exchange FTX After Implosion: WSJ

Binance backed out of a plan to save the platform, citing in part “mishandled customer funds and alleged US agency investigations.”

With the help of the Securities and Exchange Commission, the Justice Department is scrutinizing the fallen cryptocurrency exchange FTX after its multibillion-dollar implosion this week, according to The Wall Street Journal. Employees at both agencies were “in close contact” on Wednesday, the newspaper reported, with a tight focus on possible violations of securities laws. The news of a Justice Department probe comes hours after larger exchange Binance very publicly backed out of a non-binding agreement to save FTX, citing in a statement “mishandled customer funds and alleged US agency investigations” as several of its reasons for reneging on the deal. FTX, the world’s third-largest exchange by sheer trading volume, was grown by founder Sam Bankman-Fried into a $32 billion company. But questions about a liquidity crunch sparked a panic that sent the exchange into a death spiral it looks like it will be unable to recover from, with aftershocks reverberating around the market, affecting the value of other currencies like Bitcoin and Ether.