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FTX Task Force: US investigators to ‘trace and recover’ missing customer funds

By Darius McQuaid

Edited by Charlie Mellor

12:36, 4 January 2023

Former CEO of FTX Sam Bankman-Fried leaves court after pleading not guilty to charges related to the collapse of his company
The US SEC has estimated that customers lost more than $8bn following the collapse of FTX – Photo: Getty Images

The Manhattan US Attorney’s Office has revealed it has created an FTX Task Force to “trace and recover” missing customer funds and handle investigations and prosecutions related to the collapse of FTX.

The cryptocurrency exchange filed for bankruptcy on 11 November 2022, after which Sam Bankman-Fried (SBF), founder and former CEO of FTX, was arrested in the Bahamas a month later before being extradited to the United States.

SBF is accused of illegally using FTX customer deposits to support the quantitative crypto trading firm Alameda Research, which he also founded, as well as buying real estate and providing millions of dollars in political contributions to both the Democratic and Republican parties in the United States.

The former FTX CEO has been charged with two counts of wire fraud and six conspiracy counts, including to launder money and commit campaign finance violations, which could result in 115 years in prison if convicted.

However, despite an agreement to cooperate with prosecutors and guilty pleas from Caroline Ellison, Alameda’s former chief executive officer, and Gary Wang, FTX’s former chief technology officer, to seven and four criminal charges, respectively, Bankman-Fried has pleaded not guilty to his charges.

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Short position overnight fee 0.0137%
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+0.080% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

DOGE/USD

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Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
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Short position overnight fee 0.0069%
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‘It is an all-hands-on-deck moment’

Manhattan US Attorney Damian Williams, who is the federal prosecutor in the FTX case, told CNBC: “The Southern District of New York [SDNY] is working around the clock to respond to the implosion of FTX. It is an all-hands-on-deck moment.

“We are launching the SDNY FTX Task Force to ensure that this urgent work continues, powered by all of SDNY’s resources and expertise, until justice is done.”

Williams’ deputy, Andrea Griswold, will lead the task force, which will work with specialist units covering securities and commodities fraud, public corruption, and money laundering and transnational criminal enterprises.

The US Securities and Exchange Commission (SEC) has estimated that customers lost more than $8bn (£6.6bn) as a consequence of the alleged fraud at FTX and Alameda Research.

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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.
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