Feds have contacted former FTX employees as part of investigation

Quick Take

  • Former FTX employees tell The Block they have been contacted federal law enforcement for more information into the company’s downfall. 
  • The investigative outreach is part of a broader probe into the company’s operations. 

Federal law enforcement is in touch with former FTX employees as part of a criminal investigation into the failed exchange and its sister hedge fund Alameda Research. 

Two former FTX employees have been contacted by federal authorities as part of what they believe to be a broader effort to collect information about the inner workings of the failed exchange and hedge fund, they confirmed to The Block. The contact is still at the request for information stage, rather than court-issued subpoenas for records or other information. The employees did not provide details on what information authorities sought. 

The outreach is one piece of a broader federal probe into the companies involving the Justice Department, the Securities and Exchange Commission, the Commodity Futures Trading Commission and state regulators. FTX's bankruptcy lawyers have also said in court that new CEO John Ray III is cooperating with law enforcement and regulators

In bankruptcy court proceedings, Ray lamented a lack of substantial record-keeping at the company, a common red flag for prosecutors, who reportedly had an ongoing investigation into the company well-before its public collapse.

Bankman-Fried claimed statements made by Ray and company lawyers in court were false in a recent interview with The Block, but has also claimed not to remember certain details. 

The House Financial Services Committee has invited Bankman-Fried to testify next week at a hearing on FTX's collapse. He has so far declined, saying he might appear after he has "finished learning and reviewing what happened," at his own companies. The committee is weighing a subpoena to compel his appearance, though one remains unlikely due to complications around enforcement. 

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