FTX Legal Woes Continue As Another Top US Law Firm Launches Investigation Into the Exchange’s Activities.
Scott+Scott, an international law firm focusing on complex litigations across U.S. and Europe, has announced that it is investigating the collapse of FTX to determine whether its executives violated United States securities laws.
The law firm urged investors of FTT, the native cryptocurrency of FTX, who suffered huge losses in the exchange’s collapse, to contact its attorney Sean Masson.
“If you purchased FTX securities (e.g., FTT tokens or its high yield-bearing accounts) and have suffered losses to your FTX investments, you are encouraged to contact Scott+Scott attorney Sean Masson at (212) 822-5522 or email@example.com,” the law firm noted in a press release.
FTX Legal Woes Soar
The recent development further increases Sam Bankman-Fried and FTX’s legal woes. As reported yesterday, a top United States law firm Rosen announced that it has started investigating the collapse of FTX. The rationale behind the move is to enable the company to prepare a class action against the former leading cryptocurrency exchange and its founder to help investors recover their losses.
Rosen and Scott+Scott are not the only entities investigating the FTX incident. The United States Justice Department revealed earlier this week that it was also investigating the matter to ascertain whether the exchange misappropriated customers’ funds. In other news, Tether has commenced freezing USDT accounts linked to FTX based on authorities’ requests.
FTX Sudden Collapse
On November 2, 2022, cryptocurrency news outlet Coindesk reported that the balance sheet of Alameda Research was being used as collateral to further FTX’s loans. Two days later, a pseudonymous cryptocurrency researcher known as Dirty Bubble Media asked if FTX was insolvent, adding:
“It’s almost as if SBF found a way to hack the financial system, printing billions of dollars out of thin air against which he was able to borrow massive sums from unknown counterparties.”
Changpeng Zhao, Binance CEO, and founder made matters worse for FTX after he announced that the exchange would liquidate its position in FTT, which was worth approximately $530 million at the time.
CZ noted that Binance did not make the decision to move against its competitor, FTX. However, he said Binance will not support “support people who lobby against other industry players behind their backs.”
FTX and Alameda Research, were plunged into a series of troubles, which exposed the state of FTX’s financial holdings. Sources claimed that a huge hole of $6 billion was found in the exchange’s balance sheet. All moves to salvage the situation, including the last-minute attempt made by Binance to acquire FTX, did not yield positive results.
Left with no other option, FTX filed for Chapter 11 bankruptcy. While many people thought FTX’s woes were over, the admin in charge of the exchange’s Telegram group disclosed that hackers had hijacked the trading platform. Users were urged not to access the FTX website as it might download Trojans onto their devices.
These unfortunate developments caused the value of FTT to dip from a weekly high of above $25 to a paltry $1.91 today.