It has been agreed that the U.S. Securities and Exchange Commission (SEC) and the auditing company Prager Metis will not be held responsible for the failure of the cryptocurrency exchange FTX.
The SEC charged Prager Metis with two counts of making false audit reports for FTX between February 2021 and April 2022. The company agreed to pay $1.95 million to settle the claims.
SEC Highlights Prager Violations
The SEC pointed out that Prager violated generally accepted auditing standards and did not look at the “increased risk” that the connection between FTX and the hedge fund that is connected with it, Alameda Research.
Along with Binance and Coinbase, FTX was once a well-known name in the cryptocurrency industry. However, in 2022, it went through a rapid decline after it was revealed that its financial statements had been falsified and that customer funds had been mixed with company assets.
Soon after, there was a shortage of cash, which caused founder Sam Bankman-Fried to stop payments before the company finally went bankrupt.
After being brought back from the Bahamas, Bankman-Fried was given a 25-year prison term by a court in Manhattan. Last week, he officially appealed the decision, saying that the judges were biased and asking for a new trial. He said that he did not intentionally steal over $8 billion from investors.
