U.S. regulator probes FTX over dealing with of shopper funds -source By Reuters

WASHINGTON (Reuters) -The U.S. securities regulator is investigating crypto alternate FTX.com’s dealing with of buyer funds amid a liquidity crunch, as effectively its crypto-lending actions, a supply with data of the inquiry mentioned on Wednesday.

The Securities and Change Fee (SEC) is inspecting whether or not the platform is following securities legal guidelines associated to segregation of buyer belongings and buying and selling towards prospects, the supply mentioned. The probe started quite a lot of months in the past.

The Commodity Futures Buying and selling Fee (CFTC) can be probing the problem, Bloomberg reported earlier on Wednesday.

FTX.com didn’t instantly reply to Reuters’ requests for remark.

The crypto trade has been in tumult as hypothesis about FTX’s monetary well being snowballed into $6 billion of withdrawals within the 72 hours earlier than Tuesday morning. Crypto large Binance in a while Tuesday mentioned it signed a nonbinding agreementto purchase FTX’s non-U.S. unit to assist cowl a “liquidity crunch” on the rival alternate.

The SEC can be scrutinizing the agency’s relationship with its U.S. counterpart FTX US and Chief Government Officer Sam Bankman-Fried’s proprietary buying and selling agency, the supply mentioned.

An SEC spokesperson declined to remark, saying: “The SEC doesn’t touch upon the existence or nonexistence of a doable investigation.”

A CFTC spokesperson additionally declined to remark.

The SEC has ratcheted up scrutiny of the crypto trade beneath Democratic management. Chair Gary Gensler has beforehand raised considerations about whether or not crypto platforms are correctly segregating belongings and whether or not they’re buying and selling towards their prospects with their market-making actions.

Earlier this yr, a subsidiary of crypto agency BlockFi Inc agreed to pay a document penalty to settle costs associated to its retail lending product. Different firms like FTX enable customers to “stake” sure crypto tokens in alternate for a yield.