Federal Prosecutors Meet With FTX Bankruptcy Team

FTX’s new CEO has reportedly met with federal prosecutors. 

John J. Ray III — who was appointed FTX’s CEO last month — and bankruptcy lawyers met with prosecutors from the U.S. Attorney’s Office for the Southern District of New York, Bloomberg reported Thursday (Dec. 8). 

The report said that the details of the meeting were not available, but that the prosecutors are investigating allegations that FTX misused customer funds and lost billions of dollars. 

The fact that the meeting took place points to a possible overlap between the criminal and bankruptcy investigations, the report said. 

Bankruptcy proceedings often give prosecutors access to financial records and other information that would be difficult for them to attain otherwise, according to the report. 

FTX did not immediately reply to PYMNTS’ request for comment. 

This news comes about a week after Bloomberg reported that the U.S. Attorney’s Office for the Southern District of New York and the U.S. Securities and Exchange Commission (SEC), separately, have asked crypto trading firms and investors to voluntarily give them information about, and their communications with, select FTX employees and associates. 

Casting a “wide net” in this manner is common as prosecutors seek to gain information without having to request subpoenas, and witnesses, investors and customers are seen as potential sources, according to the Dec. 2 report. 

Ray was appointed CEO of FTX in November as part of the cryptocurrency exchange’s bankruptcy proceedings. 

As PYMNTS reported Nov. 17, Ray — who has 40 years of corporate restructuring experience — said that FTX experienced a complete failure of corporate controls that surpassed even what he saw at Enron. 

“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in a Nov. 17 filing with U.S. bankruptcy court.