FTX legal consultants turned over customer trading records to FBI

Multiple FBI offices have received data on FTX customer accounts from Alvarez & Marsal, a law firm advising the now-defunct crypto exchange under bankruptcy administrators led by litigation veteran John Ray III.

Alvarez & Marsal reportedly transferred the data to some five Federal Bureau of Investigation (FBI) field offices in compliance with a subpoena from the U.S. investigators. The documents sent to the FBI were extracted from FTX’s cloud base on Amazon’s AWS, per Bloomberg.

Per the billing record submitted to a bankruptcy court, the records turned over to FBI offices included specific device IDs, customer account profiles, and transaction history to name a few. 

The firm has charged around $21,000 to fulfill FBI requests for FTX information. In total, the FTX estate had paid nearly $200 million in legal fees to CEO John Ray and his bankruptcy administrators. 

It’s not uncommon for companies to cooperate with law enforcement when the requirements of probable cause are met. Notably, FTX’s founder Sam Bankman-Fried stood trial in a New York federal court and was found guilty on all seven counts including fraud.

There were also sections of witness testimony and lingering accusations related to campaign finance laws that could serve as motivating factors for further investigations into FTX, despite the jury’s guilty verdict.

Ray and his team were in the process of reassembling FTX records and assets to eventually repay beleaguered customers, an arduous task according to the litigate veteran who expressed shock at the shoddy state of corporate systems under Bankman-Fried.

As of June 2023, Ray’s FTX had recovered around $7 billion earmarked for repayment to creditors. The estate is also suing protocols like LayerZero, former executives and Bankman-Fried’s parents to clawback over $1 billion on customer cash and crypto deployed for unlawful purposes. 

Entities like Stanford University and New York’s Metropolitan Museum of Art have willingly offered to return donations directed to them by FTX while Bankman-Fried managed affairs.

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