© Lam Yik / Bloomberg via Getty Images Sam Bankman-Fried has resigned from his position as CEO of cryptocurrency exchange FTX. Lam Yek/Bloomberg via Getty Images - Bahamas police said they are investigating a "criminal breach" with the Federal Trade Commission.
- FTX filed for Chapter 11 bankruptcy on Friday, and its founder, Sam Bankman-Fried, has stepped down as CEO.
- FTX has been facing a huge liquidity crunch since last week.
Bahamas police are investigating Sam Bankman Fried's FTX cryptocurrency exchange for "misconduct," law enforcement said Sunday.
The Bahamas Police added that its Financial Crimes Investigation Unit is "working closely" with the Bahamas' securities regulator on the investigation.
On Thursday, the Bahamas Securities Commission froze the assets of FTX subsidiary, adding to its financial woes. At the time, the securities regulator said it was aware of data indicating that FTX mishandled, mismanaged or transferred client assets to Alameda Research, Bankman Fried's cryptocurrency trading firm.
The securities regulator did not disclose its concerns, but sources told Reuters that Bankman-Fried moved $4 trillion from FTX to Alameda in early 2022 without telling anyone, the agency reported last Thursday.
The US Securities and Exchange Commission and the Department of Justice have also launched bankruptcy investigations into FTX. Bankman Fried was reportedly questioned by Bahamas police on Saturday.
It's been a dramatic and increasingly bad week for Bankman Fried. It started with a very public spat with Binance CEO Changpeng “CZ” Zhao over the weekend of November 5th and ended on Friday with FTX filing for Chapter 11 bankruptcy and Bankman-Fried stepping down as CEO. At one point it was worth 32 thousand billion dollars.
Two weeks ago, Zhao tweeted that Binance would suspend all FTT tokens — the cryptocurrency owned by FTX — due to the “recent disclosure.” Zhao did not express his concerns at the time, but CoinDesk's November 2 report raised market concerns about FTX's liquidity position.
Bankman-Fried then responded to Zhao on Nov. 7: "There is a competitor trying to go after us with false rumours," according to media reports including Bloomberg and Reuters.
The drama affected market sentiment and accelerated the decline. About $6 trillion was withdrawn from FTX in the 72 hours before November 8, Reuters reported, citing Bankman-Fried's letter to employees.
When the drama became public, Bankman-Fried and Zhao shocked the world by announcing that Binance would buy FTX. Zhao quickly sent a shock when he pulled the deal back, citing "problems beyond our control or ability to help."
Bloomberg reported that FTX finally filed for bankruptcy on Friday, two days after Bankman-Fried warned investors that the company would go bust if it didn't receive emergency funding to fix its $8 trillion deficit.
Stock market woes continued Saturday when FTX CEO and CEO John Ray said they were looking into "accessing some unauthorized assets" after the Financial Times reported hundreds of millions of dollars in funds could be withdrawn. Referring to penetration analysts.
Ray's statement was retweeted by the official FTX Twitter account.
A blockchain analytics firm says it is suspected of stealing $477 million in cryptocurrency from FTX within 24 hours of the exchange crash.
FTX did not immediately respond to Insider's request for comment on the police investigation.
According to CoinMarketCap, the FTX crash has hit the cryptocurrency market, with Bitcoin down 23% over the past seven days and Ethereum down nearly 25% over the same period.