FTX, the world's third-largest cryptocurrency exchange by volume, is facing US investigations amid financial turmoil that is causing a sudden meltdown in the cryptocurrency market.
The US Justice Department and Securities and Exchange Commission (SEC) are investigating FTX, according to news reports Wednesday.
The SEC is handling the firm's domestic subsidiary, FTX.US, and hundreds of cryptocurrencies and tokens listed on the exchange. The regulator is also looking into if some of the assets are regarded as securities that should have been registered with the SEC under American trade laws.
The market watchdog may enforce penalties if it concludes that the platform's investors were not protected.
The Justice Department is investigating criminal violations, such as fraud, which could result in prosecutions, according to the reports.
FTX asked Binance, the world's biggest cryptocurrency exchange by volume, for help Tuesday with a buyout. While Binance co-founder and CEO Changpeng Zhao said FTX has "a significant liquidity crunch," the company announced Wednesday that the deal will not go through.
The price of Bitcoin dove below $16,000 late Wednesday, giving up all gains in the past two years, while the crypto market lost more than 20% in value in the last two days.
