Turkish authorities launch investigation on Samuel Bankman-Fried

Turkish financial authorities are investigating FTX founder and former CEO Samuel Bankman-Fried for alleged fraudulent conduct.

The Turkish Financial Crimes Investigation Board (MASAK), which operates under the Ministry of Treasury and Finance, is leading the investigation. The authorities have also seized the crypto exchange’s assets within the country.

Earlier this month, Turkish authorities initiated a probe into the company’s collapse. In addition to probing the company’s subsidiary in Turkey, they also looked into financial institutions and crypto-asset providers that had worked with FTX in the region.

Turkish minister of finance Nureddin Nebati discussed the risks the cryptocurrency market is facing following FTX’s bankruptcy. Nebati suggested investors approach this market with “maximum caution” despite the opportunities it could provide.

Turkey joined other countries, including the U.S. and the Bahamas, that have also started investigations on the exchange and its former top executives.

The Securities Commission of the Bahamas has ordered the exchange to transfer its Bahamian-based digital assets to the commission’s digital wallet. The commission said it was done to protect customer assets.

In the U.S., the Securities and Exchange Commission (SEC) and the Department of Justice have launched a probe as well, but there have been no formal actions taken at the time of writing. Authorities in California and New York have also started an investigation into the company’s failure.

FTX established FTX Turkey to cater to the country’s crypto users. Data showed that many Turkish people had started to invest in crypto assets in the past few years due to the country’s rapid inflation, which brought down the value of its lira. Approximately eight million people in Turkey have used cryptocurrency.

Investors in Turkey had suffered from the withdrawal freeze FTX implemented following its liquidity crunch. Later, however, FTX Turkey began to process some withdrawal requests.

The subsidiary also asked users who had not received refunds to fill out a Google Form. Although the defunct exchange asked for each refund applicant’s International Bank Account Number, it did not specify the refund date.

The exchange’s Turkish subsidiary asserted that it planned to return all customer assets despite the odds.

"Even during the technical difficulties caused by FTX.com, the FTX TR [Turkey] team worked hard not to victimize the users by giving their best and continues to work,” FTX Turkey said.

“Sharing transparent information about the process from its social media accounts, we manage this process professionally and in a way that does not harm its users.”

Calls for tight monitoring

FTX’s failure to manage customer funds creates a wave of responses from authorities around the globe, including the U.S.

Congress members have demanded a clear regulatory framework to prevent a similar thing from happening. Meanwhile, some parties have started to blame the SEC for failing to adopt securities laws in the crypto sphere. J.W. Verret, a former SEC advisor, wrote that this failure caused fraudulent exchanges like FTX to “thrive” overseas.

FTX went bankrupt after failing to process customer withdrawals due to a discrepancy in its balance sheet. Bankman-Fried allegedly misused around $10 billion of customer funds to make risky investments through his other company, Alameda Research. According to the company’s new CEO, John Ray III, Bankman-Fried had managed to move FTX assets without investors’ knowledge.