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FTX: forensic investigators called in to find customers’ money

By Alara Jordan

13:20, 8 December 2022

FTX logo
FTX filed for bankruptcy on 9 November after a liquidity crisis hit the firm – Photo: Shutterstock

The new crypto exchange administration team behind the collapsed FTX has enlisted the help of forensic investigators to help recover consumer funds worth millions of dollars.

The advisory firm AlixPartners was picked for the job, and the investigation will be led by Matt Jacques, a former chief accountant for the Securities and Exchange Commission (SEC).

It is understood that investigators will conduct asset-tracing to help locate the missing funds, according to a recent report, after assets worth more than $500m were allegedly stolen from FTX and FTX.US customer wallets on 11 November.

FTT to USD

The downfall of FTX

The rocky position of FTX was first highlighted after a report showing its sister firm Alameda Research’s balance sheet raised questions about the close ties between it and FTX and how the crypto exchange handled consumer funds. 

DOGE/USD

0.11 Price
+0.850% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

XRP/USD

0.54 Price
-1.640% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

ETH/USD

3,196.30 Price
+0.950% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BTC/USD

60,102.55 Price
+2.440% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

FTX and its 101 subsidiaries filed for bankruptcy on 9 November after a liquidity crisis hit the firm, with more than $1bn in value wiped from its platform. 

More trouble hit FTX after its bankrupty filing after the exchange was hacked for cryptocurrency worth more than $500m days after its collapse.

The former CEO of FTX, Sam Bankman-Fried, took to Twitter days after FTX's bankrupty was announced and set out his intention to raise rescue funds for the exchange with a goal to “make customers whole” again. 

However, Bankman-Fried has come under intense scrutiny since the downfall of FTX,  once the third-largest cryptocurrency exchange. Changpeng Zhou, chief executive of Binance, has called Bankman-Fried “one of the greatest fraudsters in history.” Zhou said: “He is also a master manipulator when it comes to media and key opinion leaders.”

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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