U.S. Securities Regulator Probes FTX Investors’ Due Diligence

The U.S. Securities and Exchange Commission (SEC) is seeking details about FTX investors’ due diligence, according to two sources familiar with the inquiry, as fallout from the crypto firm’s collapse spreads.

The SEC has so far brought charges against three of FTX’s top executives, accusing them defrauding investors in the crypto trading platform that has since filed for bankruptcy.

The SEC is now asking financial firms what diligence policies and procedures they have in place, if any, and whether they followed them when choosing to invest in FTX, the sources said.

The sources declined to be identified as the inquiries are not public.

Reuters was not able to determine how many firms were fielding such queries from the regulator. The SEC has alleged the Bahamas-based crypto exchange raised more than $1.8 billion from equity investors, including 90 U.S.-based investors, since May 2019.

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