FTX Advisers Disclose Customer Information to FBI, Shows Report

Published: Nov 3, 2023
Written By:
Vignesh Karunanidhi
Milk Road Writer

Advisers for collapsed cryptocurrency exchange FTX have disclosed customer transaction data and account details to multiple FBI field offices in recent months, according to a report by Bloomberg.

Consultancy Alvarez & Marsal has provided information on specific FTX users’ trades and accounts in response to FBI subpoenas and requests. This was revealed in the firm’s billing records submitted for court review.

FTX customer privacy compromised

The revelations serve as a reminder that privacy on centralized crypto platforms like FTX is not absolute, especially regarding law enforcement inquiries.

While details remain limited, the disclosures show FTX consultants extracted and investigated customer information for FBI offices in Portland, Philadelphia, Oakland, Minneapolis, and Cleveland.

Read more: OpenSea Cuts Jobs by 50% to Refocus on “OpenSea 2.0” NFT Marketplace

Nature of FBI probes unclear

The billing records do not specify the focus of the FBI probes or intended targets. However, legal services related to an apparent grand jury subpoena are mentioned.

In September, Alvarez & Marsal provided data to the FBI’s Philadelphia office tied to certain device IDs and cloud computing records. FTX stored some crypto keys with Amazon Web Services.

Two consultants billed over $21,000 for FBI-related work over three months. These legal fees reduce potential recoveries for FTX users from the bankruptcy estate.

In total, FTX advisers have charged nearly $100 million since November 2022. Customers effectively bear those costs.

FTX’s collapse has already drastically damaged account holders, who now face an uphill battle to recoup lost funds. The ongoing revelations of data sharing with law enforcement serve as an additional breach of customer trust.

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The scrutiny of the crypto industry, primarily centralized exchanges, elevated after the collapse of FTX in 2022. In addition, as crypto regulations evolve, exchanges may face even greater pressure to surrender customer information to government agencies like the FBI. 

Sam Bankman-Fried, formerly in charge of one of the world’s largest cryptocurrency exchanges, has been convicted of fraud and money laundering following a month-long trial in New York. The jury reached its decision in under five hours. Additionally, his sentencing is scheduled for March 28, 2024.

Vignesh Karunanidhi
Milk Road Writer
Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 5 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.