(Bloomberg) -- FTX advisers have been giving federal law enforcement offices across the US information on customer accounts and records related to transactions on the failed crypto platform, court records show.

Company advisers have in recent months gathered FTX customer data in response to subpoenas from at least five FBI field offices, according to billing records from consultancy Alvarez & Marsal. Tasks included extracting information on specific customers’ trades, investigating accounts and sifting through cloud-computing data. 

The disclosures are a reminder that an oft-touted feature of crypto trading — privacy — isn’t guaranteed, especially on centralized platforms like FTX. 

What’s more, FTX customers will ultimately foot the bill for the work. Two individual advisers invoiced more than $21,000 for FBI-related tasks during the months of July, August and September, court records show. Money spent on professional fees reduces potential recoveries for FTX customers. 

The billing records, submitted for bankruptcy court review, don’t detail the nature or target of the FBI probes. One line-item references a grand jury subpoena. FTX and the FBI declined to comment, while Alvarez didn’t return a request for comment.

Device IDs

Alvarez & Marsal said in a court filing it extracted transaction data in September from the crypto firm’s cloud computing provider “related to specific device IDs” in response to a subpoena from the FBI’s Philadelphia office. FTX used Amazon.com Inc.’s cloud service and stored private keys to billions of dollars in cryptoassets on an AWS security tool, the company has said.

Alvarez also said it investigated customer accounts and transactions in July in response to a request from the FBI’s Oakland office and extracted customer information in August pertaining to specific transactions following a subpoena from the bureau’s Portland office. FTX’s financial adviser also investigated “activity related to specific individuals for an FBI Philadelphia Grand Jury subpoena request,” according to court documents.

From July through September, FTX responded to subpoenas from FBI offices in Oakland, Portland, Philadelphia, Cleveland, and Minneapolis, according to court papers. In a separate court filing, FTX’s bankruptcy lawyers disclosed discussions in September concerning FBI outreach to “FTX victims.”

Information gleaned from the billing records is limited and the court filings don’t detail the scope of FTX customer information or transaction data being turned over to federal agents.

Probable Cause

US crypto firms, in general, have procedures in place to comply with government subpoenas and turn over data when law enforcement has probable cause to obtain particular information, said Neeraj Agrawal, a spokesman for crypto policy non-profit Coin Center. What would be concerning, however, is if that authority were being used to mine vast troves of customer data as part of a fishing expedition aimed at finding criminal activity, Agrawal said.

“It would be worrying if they are just vacuuming up everything they can,” Agrawal said.

New FTX CEO John J. Ray III has said founder Sam Bankman-Fried and his associates didn’t keep adequate records of the platform’s private keys or its business transactions. Millions of FTX customers bought and sold crypto on the platform before the business collapsed in November 2022.

The identity of FTX’s customers have been kept from public view during its bankruptcy. Shortly after FTX filed Chapter 11, the Delaware bankruptcy judge overseeing the case agreed to keep the names of FTX’s largest creditors under seal. Creditors have argued that disclosing FTX customer names could make them vulnerable to hackers and other scams. In August, a legal services provider working with FTX said a hacker gained unauthorized access to files that may have contained customer information.

FTX founder Sam Bankman-Fried on Thursday was convicted of a massive fraud that led to the collapse of the exchange. Jurors in Manhattan deliberated for less than five hours following a month-long trial. Former FTX executives earlier pleaded guilty to fraud charges and cooperated with federal prosecutors.

The case is FTX Trading Ltd., 22-11068, in the US Bankruptcy Court for the District of Delaware.

--With assistance from Austin Weinstein.

©2023 Bloomberg L.P.