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Reeling FTX investors targeted by scammers pretending to be DOJ

FTX customers around the world no doubt regret their decision to sign on with the now-bankrupt cryptocurrency exchange. Adding insult to injury, they’re now the targets of scammers pretending to be the U.S. Department of Justice.

Police in Singapore on Saturday warned about a website pretending to be hosted by the DOJ—and supposedly helping FTX users recover their funds. The site instructs visitors to log in with their FTX user name and password. It then claims they’ll be able to “withdraw their funds after paying legal fees.”

“The site is likely a phishing website for collecting login credentials,” said the police, according to Channel News Asia.

FTX imploded in dramatic fashion this month after getting hit with $6 billion in withdrawal requests over three days—the crypto equivalent of an old-fashioned bank run. It declared bankruptcy on Nov. 11, the same day that founder Sam Bankman-Fried resigned as CEO. Calls for tighter regulation of the cryptocurrency sector have increased dramatically in the wake of its collapse. 

Under new CEO John J. Ray III, FTX is starting a strategic review of global assets as a part of the Chapter 11 bankruptcy process. Ray was also involved in cleaning up the mess after the Enron scandal, to which former U.S. Treasury Secretary Larry Summers compared the FTX fiasco. 

This week Ray said he’s never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information” as he’s seen at FTX. 

“The whole operation was run by a gang of kids in the Bahamas,” a person familiar with the matter told CoinDesk on the condition of anonymity.

Such comments will offer little reassurance to FTX customers sent into a panic after their holdings in FTX were frozen. But it does present an opportunity for scammers looking to take advantage of their desperation. 

In Singapore, retail investors are not the only ones burned by FTX. The government-owned state holding company Temasek released a statement this week saying its stake in the crypto exchange was now worthless. It did eight months of due diligence on FTX, it said, including reviewing audited financials that showed the company was profitable. It invested $210 million in FTX International and $65 million in FTX US. 

“While this write down of our investment in FTX will not have significant impact on our overall performance,” it wrote, “we treat any investment losses seriously and there will be learnings for us from this.”

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