Cryptocurrency exchange FTX files for bankruptcy as federal agencies investigate: NPR

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An advertisement for the Bitcoin cryptocurrency is displayed on a street on February 17 in Hong Kong. Bitcoin fell to a two-year low on Wednesday.

Kin Cheung/AP


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Kin Cheung/AP


An advertisement for the Bitcoin cryptocurrency is displayed on a street on February 17 in Hong Kong. Bitcoin fell to a two-year low on Wednesday.

Kin Cheung/AP

Billion-strapped struggling cryptocurrency exchange FTX is filing for bankruptcy protection after collapsing this week.

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 activity or securities offenses have occurred. The person could not publicly discuss details of the investigation and spoke to The Associated Press on condition of anonymity.

The investigation focuses on the possibility that the firm used customer deposits to fund bets on Bankman-Fried’s hedge fund, Alameda Research. In traditional markets, brokers are expected to separate client funds from other company assets. Violations can be punished by regulators.

FTX earlier this week agreed to sell out to its biggest rival Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after worrying about whether FTX had enough capital.

The crypto world had hoped that Binance, the world’s largest crypto exchange, might be able to save FTX and its depositors. However, after Binance had a chance to review the books of FTX, it became clear that the smaller exchange’s problems were too big to solve.

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