FTX Enlists Ex-SEC and CFTC Enforcement Chiefs to Probe Collapse

Saying they aim to investigate what happened at FTX and implement new controls at the company, the new leaders of the cryptocurrency exchange have brought in several experts — among them, former U.S. officials. 

The lineup includes investigations firm Nardello & Co., blockchain data platform Chainalysis, an unnamed cybersecurity company and partners from the law firm Sullivan & Cromwell LLP, The Wall Street Journal (WSJ) reported Wednesday (Nov. 23). 

Sullivan & Cromwell partner James Bromley, who is counsel to the new managers at FTX, said in court Tuesday (Nov. 22): “It’s fair to say, we typically would not quote things that happen on Twitter, but there was a quote that I think summarizes this quite well, which is, ‘What appears to be taking place is a serious investigation by serious adults.’” 

Nardello & Co. specializes in anti-corruption and fraud cases, Chainalysis can manage digital assets and the cybersecurity company can help with other tasks, according to the report. 

Sullivan & Cromwell partners include Steven Peikin, James McDonald and Nicole Friedlander, who were previously with the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the U.S. attorney’s office for the Southern District of New York, respectively, the report said. 

“What a former government official brings to the table is a very sophisticated understanding of how to conduct investigations and how to interface with … various government agencies,” Justin Weitz, a partner at law firm Morgan, Lewis & Bockius, said in the WSJ report. 

This report comes after a Nov. 17 filing with a U.S. bankruptcy court in which John J. Ray III, who was appointed CEO of FTX as part of the company’s bankruptcy proceedings, said he’s never seen a company as badly run as FTX. 

“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 the filing.