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Is FTX US safe? American subsidiary under SEC, Justice Department scrutiny

By Alara Jordan

Edited by Charlie Mellor

11:52, 10 November 2022

FTX logo
The downfall of FTX has sent the crypto market into a tailspin over the last 48 hours – Photo: Shutterstock

The downfall of what was once the third-largest cryptocurrency exchange has sent the crypto market into a tailspin over the last three days.

In just 72 hours, FTX’s native ftx token (FTT) has lost more than 75% of its value. There have been rumours reported by Bloomberg that the company is at risk of bankruptcy after founder and CEO Sam Bankman-Fried saw nearly $16bn wiped from his networth overnight. 


Several FTX users are said to have been denied access to their accounts with withdrawals still suspended or taking longer on the exchange. But does this impact FTX.US?

FTX.US operates as a seperate exchange and although it is a subsidiary of FTX, the two firms have always operated seperately due to regulatory differences and jurisdictions.

However, new reports published by the Wall Street Journal claim that FTX.US is now being investigated by the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over whether FTX had correctly handled its clients’ funds.

The investigation has not been publicly disclosed, although according to Bloomberg began “months ago”, due to close links between FTX and FTX.US as well as trading firm Alameda Research.

Binance bailout off the cards

On Monday, Bankman-Fried, also known as SBF, reassured users in a stream of Tweets that FTX and its assets were “fine”. Just 24 hours later, SBF and Binance CEO Changpeng ‘CZ’ Zhao announced that the two firms had signed a non-binding letter of intent for Binance to acquire FTX.

CZ confirmed that he had been asked by FTX to step in, and that the deal would be subject to strict due diligence checks.


174.39 Price
+2.540% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652


0.13 Price
+7.030% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872


0.60 Price
+3.180% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168


67,351.45 Price
+0.620% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

But Binance walked away from the deal 24 hours later, with CZ confirming reports of “mishandled customer funds” and that the decision had been swayed by alleged US agency investigations.

“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” said Binance on Wednesday.

After the bailout was off, Bankman-Fried reportedly told investors that FTX needed $8bn to continue operating.

Concerns about FTX’s liquidty issues spurred users to withdraw more than $6bn of funds in the 24 hours since Binance announced it would divert all of its FTT holdings. 

Call for regulatory action

In a press release, US House Representative Patrick McHenry called on Congress to better protect US citizens exposed to digital assets.

“It’s imperative that Congress establish a framework that ensures Americans have adequate protections while also allowing innovation to thrive here in the US,” McHenry said.

“I look forward to learning more from FTX and Binance in the coming days about these events and the steps they will take to protect customers during the transition.”

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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 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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