Updated on January 9, 2023 12:50 PM
Late Thursday, the California Department of Financial Protection and Innovation announced an investigation into FTX.
In a news release, the regulator was "investigating the apparent failure of crypto asset platform FTX." A spokeswoman declined to elaborate.
"We take our oversight responsibility seriously & expect any person/business offering securities, loans, or other financial services in C.A. to comply with the law."- DFPI stated in a Tweet.
Affected individuals were urged to contact the regulator to make a complaint.
A review of the DFPI's database shows FTX is not a registered money transmitter in the state.
Following the exchange breakdown earlier this week, California became the first state to indicate that it was looking into it. Before the collapse, other states, notably Texas, were investigating FTX, and their investigations are expected to broaden.
The probe in FTX broadened after various experts and domain Guru talked about the lack of regulations in the U.S. Digital Asset market.
According to a person briefed on the matter, U.S. officials, including the Department of Justice, have contacted crypto exchange Binance for details about its recent dealings with FTX in the two businesses' negotiations regarding a potential rescue.
Following the liquidity crisis, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Department of Justice (DOJ) are allegedly investigating the crypto exchange.
Before the liquidity problem, the Texas State Securities Board was investigating FTX for charges of marketing unregistered securities to residents – but the role of individual U.S. states in crypto companies remains unclear.
In addition, this week, FTX US' senior lawyer urged workers to keep work-related papers, indicating additional legal risk for Bankman-crypto Fried's enterprise. FTX US General Counsel Ryne Miller directed employees on Wednesday to save any emails, messages, notes, and documents related to their work at FTX, FTX US, Alameda, and linked firms.
In reaction to the discovery of FTX's debacle, the White House said today that more stringent oversight of cryptocurrencies is essential to avoid hurting ordinary Americans.
During a press conference on Thursday, White House Press Secretary Karine Jean-Pierre was asked if authorities should take a "harder look" at the crypto sector in the aftermath of FTX's failure.