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EXCLUSIVE: Former FBI agents who specialized in financial crimes and organized crime said federal investigators are likely in a "full court press" probing the FTX collapse and Sam Bankman-Fried.
The former special agents, who each spent more than two decades in various roles at the FBI, outlined how investigators are likely approaching the case behind closed doors. They both noted the complexity and scope of the investigation which could last several months.
"This is going to be a large investigation," Thomas Raftery III, who focused on white collar crime and was a certified fraud examiner at the FBI, told FOX Business in an interview. "If it was me, one of the first things of the several things I would do would be to scour that bankruptcy filing. I'm sure they're making arrangements to preserve all the financial documents related to FTX, and any associated entity because my understanding is that there were a number of interrelated party transfers."
"I think you're going to see a full court press on this," he said. "I'd be shocked if you saw anything else."
FTX FOUNDER SAM BANKMAN-FRIED ON HOT SEAT AS SENATE INQUIRIES, CRIMINAL PROBES MOVE FORWARD FTX founder Sam Bankman-Fried speaks during a House Committee on Financial Services hearing on Dec. 8, 2021 in Washington, D.C. (Jabin Botsford/The Washington Post via Getty Images / Getty Images)
FTX, a once prominent cryptocurrency trading platform, declared bankruptcy earlier this month as a result of a liquidity crisis that caused the company to collapse. The crisis was revealed after Binance, another major trading platform, backed out of deal to purchase FTX following an audit of internal financial information in early November.
In a statement to CoinDesk, which first reported the news, a spokesperson for Binance said FTX's issues were "beyond our control or ability to help." FTX founder Bankman-Fried then apologized to platform users, many of whom lost money due to the collapse, and admitted he "f—ed up." At least $1 billion worth of customer funds reportedly vanished amid the collapse of FTX.
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"I would try to identify all bank records," Raftery, who is now the managing partner of private investigative firm Falcon Consulting Group, continued. "One of the interesting things I would do is I would quickly try to reach out and interview the CEO of Binance. There's some interesting statements there, along with his other executives."
"I would try to see what kind of red flags appeared on their corporate due diligence that got them to pull out of that purchase."
Raftery added that the FBI should interview John Ray III, the new FTX CEO who replaced Bankman-Fried. Ray wrote in the company's bankruptcy filing that he has never before seen such a "complete failure of corporate controls."
A view on Nov. 19 of the penthouse balcony at The Albany in Nassau, Bahamas, which belongs to Sam Bankman-Fried. (AJ Skuy for Fox News Digital / Fox News)
Dennis Franks, who retired as a supervisory special agent from the FBI after a 22-year career, also said that the FBI and other federal investigative agencies would devote a large amount of resources to the case considering the widespread impact on Americans. Franks said particular attention would be given to any potential misinformation FTX had shared to customers about its finances.
"There may be a number of agencies involved in this because it is such a major situation, a major financial matter that affects a lot of people," Franks, who is also the president of Investigative & Security Global Solutions, told FOX Business in an interview. "As far as the FBI, I think what they'll be looking for is any kind of misstatements, deception and things of that nature."
"At some point, they'll look at the books and determine what was the capital, what were the assets and if customers were being deceived as to the viability of the company," he said. "Nevertheless, I think it's clear that something was afoul here in that whatever statements were made by the company to bring in customers that, if they weren't accurate, if they weren't true, then it could be violations of federal law."
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Both former agents said that the U.S. Attorney's Office for the Southern District of New York, which is reportedly heading the federal investigation for the Department of Justice, may also be taking steps to prevent any potential destruction of evidence by issuing subpoenas or court orders. They also noted that the federal government may be examining a potential extradition of Bankman-Fried.
"It's not something that happens overnight, I can tell you that," Raftery said. "It goes to court in the U.S. then there's paperwork being filed with the government down there and then there's a court proceeding down there that he's going to appeal down there. Ultimately, a judge is going to make a decision on whether he's ordered back to the U.S. Marshals fly down there, grab him, bring him back. Then the process starts all over again here."
"It's not unusual for a subject of an investigation to have fled or be in a foreign country," Franks added. "I think the key is going to be, where's the primary evidence? Where was everything kept."
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Additionally, Raftery said the FBI may be examining the role that the two certified public accountant (CPA) firms hired by FTX to audit the company's financials played in the collapse. FTX hired New Jersey-based Prager Metis CPAs LLC to audit its offshore entities and California-based Armanino LLP to audit its U.S. operations.
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"I do a lot of work in New Jersey and around the world. I've never even heard of these guys," Raftery told FOX Business. "The U.S. operations were audited by an Armanino LLP out of California. Again, that appears to be a very small entity. I mean, you're using these two small CPA firms to audit, to provide audited financial statements on a complex entity like FTX. I would be all over the account. I'd want to know what was going on."
"How much they were relying on information provided to them by FTX?" he added. "Because a lot of times, it's a shame to say, but a lot of times you'll get these smaller accounting firms, and they'll rely on what's given to them as opposed to actually conducting the type of scrutiny that is required."
Meanwhile, as federal agencies continue their FTX investigation, multiple congressional committees, beginning this week with the Senate Agriculture Committee which oversees the Commodity Futures Trading Commission, are slated to launch probes of their own into FTX and Bankman-Fried.
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