According to the new chief of FTX, a once-$32 Billion crypto exchange, Sam Bankman Fried’s business empire has misappropriated customer funds. FTX is in bankruptcy. The documents contained no financial statements and the management had no control over the contents.
John Ray III, a veteran liquidator told a US court that FTX was his most egregious case of corporate bankruptcy in his 40-year history. It’s a company with billions of dollars in funding from top VCs like Sequoia and SoftBank.
According to a Delaware court expert, FTX didn’t keep accurate accounting records. There were no safeguards in place for digital assets owned by customers. Also, customer funds were not protected. The company didn’t have an accounting department, as this was handled by an outsourcing third party. It was missing “exact list” Bank accounts are not available for the company. There is no employee list. Control of security keys for digital assets management was done through “an insecure group account email”.
The company spent its funds uncontrollably on buying real estate, personal items, and consulting services. Payments were approved via posts using emojis within the corporate Slack messaging system. FTX management did not keep records of decision making, and on the contrary, Mr. Bankman-Fried often used instant messengers with the automatic deletion of messages “and encouraged employees to do the same.”
Alameda Research, a part of the cryptocurrency empire issued $4.1 billion worth of loans to related parties. $3.3 billion went to Bankman-Fried and companies controlled by him. Earlier, the businessman said that he “inadvertently” transferred Alameda funds from FTX clients totaling $ 8 billion. Mr. John Ray stated that the goal of the bankruptcy process was to “comprehensive, transparent and balanced investigation [вероятных] “Accusations against” Bankman Fried.
The real value of assets held by the international division at FTX crypto currency exchange was $659,000. Although the amount owed to customers is not yet calculated, it is anticipated that it will. “significant”. According to the new company head, FTX has transferred $ 740 million worth of cryptocurrency to offline cold wallets. These wallets are protected from external attacks. He also mentioned that FTX resources had been hacked immediately after bankruptcy filings. It was estimated that approximately $400 million of funds were stolen.
A lack of reliable data is the main obstacle to bankruptcy. Documents prepared during the Bankman Fried era aren’t credible because they don’t include information on customers’ obligations. According to the bankruptcy filing, the combined assets and liabilities of Alameda as well as the American FTX were valued at between $10 and $50 billion. It was revealed that FTX Digital, another Bahamas holding company, had been declared bankrupt by authorities. It is possible that both cases will be combined.