California financial regulator announces FTX investigation

California becomes the first state to officially announce an investigation.

California's Department of Financial Protection and Innovation announced it was investigating FTX late Thursday.

The regulator did not provide much detail in a press release, only saying it was "investigating the apparent failure of crypto asset platform FTX." A spokesperson declined to comment further.

"The DFPI is the agency responsible for administering the state's lending and banking laws, the recent California Consumer Financial Protection Law and the state's securities laws, which govern broker dealers, investment advisers, and commodities," the release said.

The regulator asked affected persons to contact it to file a complaint.

FTX is not a registered money transmitter in the state, according to a search of the DFPI's database.

California becomes the first state to announce it was investigating the exchange after its failure earlier this week. Other states have already been looking into FTX, including Texas, prior to the collapse, and it's likely their investigations will expand in scope.

Federal entities like the U.S. Department of Justice and Securities and Exchange Commission are also investigating FTX after its collapse, reaching out to companies like Binance for information about the exchange.

Ryne Miller, the general counsel at FTX US, has already told employees to preserve work-related documents, a move that generally happens either when companies anticipate litigation or in response to subpoenas or other ongoing investigative tools.

Leading lawmakers like Senator Sherrod Brown (D-Ohio), who chairs the Senate Banking Committee, have also urged "financial watchdogs to look into what led to FTX's collapse."