May 19, 2024

FTX advisers sharing customers’ data with FBI: Report

FTX advisers have complied with subpoenas from multiple FBI field offices in recent months, providing law enforcement with records of some customers’ trades.

Advisers for bankrupt crypto exchange FTX have been disclosing data from customers’ transactions and accounts with the Federal Bureau of Investigation (FBI), according to court documents seen by Bloomberg. 

In response to subpoenas issued by several FBI field offices during the past few months, FTX consultants turned over to law enforcement records of specific customers’ trades on the bankrupt crypto exchange.

The FBI’s requests were disclosed on billing records from Alvarez and Marsal, a consultancy serving as financial advisers for FTX. Over the past few months, the firm’s staff extracted information from some customers’ trades for FBI offices in Portland, Philadelphia, Oakland, Minneapolis, and Cleveland.

Screenshot of monthly fee statement of Alvarez and Marsal. Source: Kroll

The billing records did not reveal what type of investigation the FBI conducted or who the target was, although a grand jury subpoena is mentioned in one of the records.

In a court filing, Alvarez and Marsal reported that it shared transaction data from FTX’s cloud computing provider in September in response to a subpoena issued by the FBI’s Philadelphia office. It also conducted investigations into customer accounts and transactions in July, following a request from the FBI’s Oakland office. Additionally, in August, the firm extracted customer information related to specific transactions, in compliance with a subpoena from the FBI’s Portland office.

FTX customers will ultimately pay for the work. According to Bloomberg, in July, August, and September, two advisers invoiced more than $21,000 for FBI-related services. In total, Alvarez and Marsal have charged almost $100 million in fees from FTX since November 2022, court records show. The money will be reduced from recoveries for FTX customers.

FTX’s new CEO, John J. Ray III, recently revealed that the exchange’s customers could receive over 90% of their assets by the end of 2024 as a result of a proposed settlement between FTX creditors and debtors.

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