CrowdStrike Holdings, Inc. (CRWD) saw its stock price plummet by 5.04% in Friday's trading session, following reports that U.S. authorities are expanding their investigation into a controversial deal involving the cybersecurity firm. The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are now scrutinizing the role of senior CrowdStrike executives in a $32 million transaction with Carahsoft Technology.

According to sources familiar with the matter, investigators are probing what CrowdStrike's top management may have known about the deal, which involved supplying cybersecurity software to the Internal Revenue Service (IRS). The situation has raised eyebrows as Carahsoft reportedly made on-time payments for the order, but the IRS never purchased or received the products. This development has sparked concerns among investors about potential accounting irregularities and governance issues at the company.

The investigation appears to be broadening in scope, with authorities also examining other CrowdStrike transactions and questioning former employees about the company's deal-making practices. Of particular interest are allegations of "pre-booking" or "channel stuffing," practices that could mislead investors by improperly recognizing revenue. Despite the mounting pressure, CrowdStrike maintains its stance, with a company spokesperson stating, "We stand by the accounting of the transaction." As the probe continues, investors will be closely watching for any further developments that could impact the company's financial standing and market position.