Yahoo Finance legal correspondent Alexis Keenan outlines the potential charges federal prosecutors are considering throwing at crypto exchange FTX and its founder Sam Bankman-Fried.

Video Transcript

- We want to stick with this story. With billions having vanished or in limbo right now, the FTX's debacle has garnered the attention of prosecutors here in the US. Yahoo Finance's Alexis Keenan has the details on that. And Alexis, what do you think the potential legal fallout from FTX could potentially look like?

ALEXIS KEENAN: Seana, a lot of speculation right now. That's all it is right now. But we're getting reports from Reuters, from "Wall Street Journal," saying that the US attorney's office in Manhattan is interested in probing into the collapse of FTX. But also Reuters now reporting that they are joined by the Department of Justice, the CFTC, rather, and also the SEC, all concerned about these peculiar transactions around the collapse of the exchange as well as the 134 related entities that filed for chapter 11 bankruptcy protection on Friday.

Now, the concern is around these reports that Sam Bankman-Fried's Alameda Trading firm used FTX customer funds to trade without their consent. Now, that would violate US Securities law, but also FTX's own customer contracts. So there's concern there that there could be some criminal wrongdoing going on there. In addition, there was that approximate $477 million in unauthorized withdrawals that flowed out of FTX within 24 hours of its bankruptcy filing.

As for the Bahamian authorities, the legal enforcement there is also said to be investigating if any criminal activity did occur. And while FTX issued a statement on the heels of the bankruptcy, saying that they would comply through Bahamian regulations by beginning to facilitate withdrawals of Bahamian funds, on Saturday, the Bahamas Securities Commission debunked that. They said otherwise. They said it had not directed FTX in any way to prioritize the withdrawals of these Bahamian client funds.

So legal experts, though, Seana, say that getting jurisdiction over Sam Bankman-Fried as well as over FTX may not be too big of a hurdle even though the company has that Bahamas base. And that is because there's likely a nexus with the US, whether that's through US banks or whether that's through emails sent by the company. A lot to be learned still. But these are the present concerns.