FTX Platform Under Investigation As Crypto Price Slide Stress Tests The System

• Sam Bankman-Fried and his FTX crypto platform have become embroiled in an investigation into Voyager Digital.
• The clampdown on offering unregulated products to US clients could have far-reaching consequences for the entire sector.
• Questions are being asked about the integrity of mainstream platforms.

The dramatic crash in the prices of cryptocurrencies has resulted in all kinds of investors stepping in to buy what they see as the bottom of the market. The people buying coins have been matched by big players in the sector snapping up struggling platforms to have a larger market share should the market recover. It’s a ‘buyer beware’ market in every sense, with high-profile platform FTX now embroiled in an investigation into the Voyager Digital platform it spent $1.4bn purchasing in September.

The bidding war for Voyager Digital saw FTX and Binance go head to head in an effort to land the coins and client base of one of the losers of the 2022 crypto price crash. Voyager Digital’s filing for bankruptcy in July came about due to the platform’s exposure to the Terra ecosystem and hedge fund Three Arrows Capital. It did still boast $1.3bn in crypto assets and 3.5m users.

FTX’s ability to seal the deal for $1.4bn now looks like a poisoned pill, with FTX CEO and crypto billionaire Sam Bankman-Fried under investigation by the Enforcement Division of the Texas  State Securities Board. The court filing stated that FTX and Bankman-Fried might have found themselves offering unregistered securities in the form of yield-bearing accounts to US residents.

FTX, Voyager Digital, and Crypto Prices

The Texas investigation could have wide-reaching ramifications for the crypto sector. FTX has been one of the most active buyers of struggling platforms and was reportedly looking to raise an additional $1bn to continue its shopping spree.

Its CEO and other principals are now having to focus on resolving issues at Voyager that could take one of the bottom fishers out of the market. Other aggressive platforms may benefit from less competition, but the whole sector is creaking, thanks to the prices of the assets on platforms tanking throughout 2022. The last thing crypto investors need is operational risk to become a major price driver.

Those who consider this the final shake-down of the crypto market and a chance to buy at the bottom would do well to consider the health of the platform or broker they use. With crypto-specific exchanges coming under pressure, opting to trade using a multi-asset broker more than ever seems the far safer choice.

Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers and you can share your experiences here. If you would like to know more about this particular topic, or have been scammed by a fraudulent broker, you can also contact us at [email protected]

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

Share

Tweet

Safest Forex Brokers 2023

	Broker	Info	Best In	Customer Satisfaction Score
#1	72% of retail CFD accounts lose money. Founded: 2014	Global Forex & CFD Broker	Best Trading Conditions Visit broker	4.9
#2	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#3	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#4	82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#5	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#6	77% of CFD traders lose Founded: 2007	Global CFD & FX Broker	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#7	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#8	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker	5

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.