The United States Department of Justice (DoJ) has reportedly opened an investigation on claims fraud, where former FTX chief executive Sam Bankman-Fried (SBF) offshored funds days ahead of the crypto exchange’s collapse.
Bloomberg reported the federal investigation will investigate the CEO’s role in transferring funds from the exchange to the Bahamas amid its Chapter 11 bankruptcy.
The news comes just weeks after FTX faced a massive liquidity crunch, triggering a bank run on the company’s native FTT token and forcing the firm, its research wing Alameda Research, and roughly 130 affiliate groups to file for bankruptcy.
The unnamed informant cited in the article added that officials from the DoJ met FTX’s court-sanctioned management teams to discuss further investigatory plans. It will also determine if SBF had illegally transferred funds from FTX to Alameda Research, the report found.
The news comes amid a massive Twitter row between SBF and Binance chief Changpeng CZ Zhao, with the former accusing the latter of lying and cancelling a potential bailout deal to rescue FTX’s operations.
Zhao slammed SBF as “unhinged,” triggering further exchanges with the latter.
He said at the time: “Sam was so unhinged when we decided to pull out as an investor that he launched a series of offensive tirades at multiple Binance team members, including threatening to go to ‘extraordinary lengths to make us pay’ – we still have those text messages.”
