Federal authorities have ended a criminal and civil probe into cybersecurity provider CrowdStrike regarding distributor transactions without pursuing legal action.
- Department of Justice attorneys notified stakeholders in July that the probe into CrowdStrike’s distributor arrangements was concluded with no charges filed.
- Scrutiny centered around a $32-million transaction with Carahsoft Technology Corp. for federal tax agency software that was never ultimately delivered to or bought by the agency.
- While federal prosecutors at the Southern District of New York have ended their inquiry, the status of a parallel Securities and Exchange Commission investigation remains unclear.
Federal prosecutors have wrapped up an investigation into commercial arrangements between CrowdStrike Holdings Inc. (CRWD) and a major distributor and chose not to pursue enforcement actions, according to a report by Bloomberg News.
The Department of Justice attorneys informed individuals connected to the inquiry in July that the examination had concluded without any civil or criminal proceedings, Bloomberg reported, citing people familiar with the matter.
The federal probe examined the Austin, Texas-based cybersecurity firm’s handling of specific customer transactions since early 2025.
CRWD stock dropped about 1.9% on Friday.
Scrutiny Over Distributor Deals
The inquiry, conducted by the U.S. Attorney’s Office for the Southern District of New York, focused on how CrowdStrike accounted for transactions involving its distribution partners.
The main point of the investigation was a $32 million deal completed in 2023 with distributor Carahsoft Technology Corp., to supply security software for the Internal Revenue Service. Bloomberg previously reported in October 2024 that although Carahsoft remitted timely payments for the order, the IRS never actually purchased or received the products.
Some CrowdStrike personnel raised internal concerns when the deal closed on the final day of a fiscal quarter, questioning whether the transaction was complete given the uncertainty of the IRS’s ultimate purchase.
CrowdStrike has maintained that internal employee concerns were groundless and that the deal underwent a thorough review before approval. Carahsoft also previously defended the transaction’s legitimacy.
Silent Closure And Ongoing Inquiries
Federal prosecutors gave no explicit explanation regarding their specific conclusions or rationale for ending the probe. Representatives for both the SEC and the U.S. Attorney’s Office in Manhattan declined to comment to Bloomberg.
CrowdStrike and Carahsoft representatives did not respond or declined to comment on the closure.
While federal prosecutors have closed their file, Bloomberg reported it remains unknown whether a parallel inquiry by the Securities and Exchange Commission into the company’s customer accounting practices has also been terminated. CrowdStrike noted in an August regulatory filing that it continued to cooperate with information requests from both agencies regarding customer transaction accounting.
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