Ex-FTX, Alameda Executives Hit With Trading Bans

U.S. regulators this week issued trading bans against several former executives of FTX and its sister trading firm Alameda Research, barring them from buying or selling specified securities and derivatives tied to digital assets and from engaging with registered broker-dealers and futures platforms.

The orders follow multi-agency investigations into the collapse of the exchange and its affiliated hedge fund, and target conduct that regulators say occurred during the liquidity crisis that culminated in FTX’s bankruptcy filing in November 2022.

The bans, imposed under federal administrative authority, prevent the named individuals from placing orders, acting as brokers, or otherwise participating in transactions in the identified markets. The orders require the individuals to notify any employer or broker of the restrictions and to provide copies of the orders to relevant financial institutions.

The measures apply to former senior staff who handled customer funds, trading strategies or risk management at FTX and Alameda. Some of the individuals named in the orders are already facing separate criminal charges or civil lawsuits; the trading bans restrict market access regardless of the status of those other proceedings.

Agency filings cite evidence tracing transfers of funds between FTX and Alameda and internal communications about liquidity and risk as the basis for the restrictions. The filings describe the bans as part of a broader enforcement effort that has included civil charges, asset freezes and coordination with criminal prosecutors.

Industry lawyers view trading bans as a common regulatory tool to limit market access while adjudication is pending. Those lawyers note the orders can complicate efforts to resolve claims and may affect creditor recoveries because banned individuals are typically barred from coordinating trades or transfers that could alter asset values.

The orders can be lifted or modified only through formal petitions to the issuing agencies or through appeals in court. Affected executives no longer hold leadership roles; FTX filed for bankruptcy in November 2022 and Alameda’s operations were wound down.

Those subject to the bans may challenge the orders in administrative proceedings or seek judicial review.