It was revealed that FTX clients’ money was spent on business investments, political and charitable donations, and real estate.
Troubled Cryptocurrency Exchanges ftx Customer deposits spent on business investments, political contributions, charitable donations, real estate, and repurchase of shares from competing exchanges Binance,
During Sam Bankman-Fried’s hearing on Wednesday (sbf) At the trial, Professor Peter Easton, an accounting officer appointed by the US Department of Justice (DOJ) to investigate the company’s financial records, revealed that the exchange spent billions of dollars to repurchase its stake from Binance.
CZ confirms that Binance received billions of dollars from FTX
Last year, Binance CEO Changpeng Zhao (CZ) Confirmed A post on X (formerly Twitter) said the exchange received approximately $2.1 billion from the exchange in connection with its deal with FTX in 2021.
In November 2022, Binance liquidated its FTT positions worth over $580 million following speculation that FTX was solvent. The firm received the tokens back in 2019 after partnering with the exchange.
Professor Easton’s recent revelations have confirmed that over a billion dollars (approximately $1.2 billion) spent on the buyback program came from FTX’s client funds.
[Deed of property to SBF’s parents is shown to jury]
AUSA Russia: Have you analyzed the expenses from “allowed negative” accounts?
Easton: Yes.
AUSA Ross: What about Binance buy-back?
Easton: FTX exchange received over a billion dollars in client funds– Inner City Press (@innercitypress) 18 October 2023
Further investigation of the company’s bank accounts and crypto wallets linked to BNB, BTC, ETH, LINK, LTC, MATIC, UST, USTP and other cryptocurrencies revealed that the exchange started borrowing money from customer deposits in January 2021. Had given.
Easton also testified that the amount of client funds held at Alameda and FTX is nowhere near the amount the company currently offers to clients.
According to them, the amounts held in the FTX hot and cold wallets were much less than the amounts owed to customers, and the difference between the amount the exchange held and what customers owed was approximately $8.8 billion.
“The amount of customer deposits held in Alameda and FTX bank accounts was significantly less than the amount owed to FTX customers,” he said.
Alameda used FTX client funds for business expenses
Easton also discovered that when customers deposited funds into their wallet, the funds would be pulled into the “FTX Sweep Wallet,” a secret wallet created by FTX to siphon customers’ funds. As of October 2022, the gap between what the exchange owed its customers and what it held stood at $10.3 billion. Although the account was supposed to contain $11.4 billion, the company only had $1.1 billion.
During Wednesday’s hearing, he also said that hedge fund and FTX affiliate Alameda Research used customer fiat deposits to pay for its business expenses.
The professor revealed that FTX clients’ money was spent on business investments, political and charitable donations, and real estate. Some of the investments included Genesis Digital Assets, K5 Global, Anthropic, Robinhood Shares, and SkyBridge Capital, and the funds were transferred from client funds to FTX through Alameda’s bank account.
Additionally, Almeida created a fake company called Emergent Fidelity Technologies, which was used to funnel money to insiders, including the non-profit organization of FTX CEO Sam Bankman-Fried’s brother.
According to the professor, $150 million of client funds were also transferred to Alameda accounts, with $100 million of the funds transferred to SBF’s entity in the Bahamas called FTX Digital Markets. The funds were then used to purchase real estate on SBF authority.
Chimamanda is a crypto enthusiast and experienced writer who focuses on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed her interest in emerging economies. She combines her passion for blockchain technology with her love for travel and food, bringing a new and fascinating perspective to her work.
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