According to two persons with knowledge of the situation, the defunct crypto exchange FTX has lost at least $1 billion in customer assets.
FTX customer funds worth $10 billion were secretly transferred by Sam Bankman-Fried, the exchange’s founder, to Bankman-trading Fried’s firm Alameda Research, the people told Reuters.
They said that a large amount of that money has subsequently vanished. According to an estimate, an amount of nearly $1.7 billion was found to be missing. Some other reports say that there was abouot $1 billion to $2 billion deficit.
Although it is well known that FTX transferred customer monies to Alameda, this is the first time the lost amounts have been mentioned.
Sources say FTX shared info related to financial gap with senior officials
According to the two sources, the FTX CEO Bankman-Fried shared information with other senior officials last Sunday that unveiled the financial gap. They stated that the records provide a current account of the circumstances at the time. Before this week, both of the sources held senior roles at FTX exchange and claimed to have received updates from senior staff related to financial data.
The Bahamas-based FTX filed for bankruptcy on Friday in response to a spike in customer withdrawals earlier this week. The most well-known cryptocurrency crash in recent years was brought on by a rescue deal falling through with a rival exchange, Binance.
Bankman-Fried expressed his “disagreement with the depiction” of the $10 billion transfer in text exchanges to Reuters.
He claimed, “We didn’t transfer covertly. Without going into any detail, he merely stated, “We had unclear internal labelling and misunderstood it.
When questioned about the missing money, Bankman-Fried said: “???
Inquiries for comment were not answered by FTX or Alameda.
In a tweet on Friday, Bankman-Fried stated that he was “piecing together” what had happened at FTX. I was astounded to witness events fall apart in the manner they did earlier this week, he wrote. I’ll soon post a more thorough play-by-play, I promise.
According to prior reports from Reuters, losses at Alameda that the majority of FTX management were unaware of were at the root of the company’s issues.
Following Changpeng Zhao’s announcement last Sunday that Binance would sell its entire share in FTX’s digital token, estimated to be worth $580 million, “due to recent disclosures,” customer withdrawals spiked. The majority of Alameda’s $14.6 billion in assets were reportedly held in the token four days prior, according to news source CoinDesk.
The two people with knowledge of FTX’s finances claimed that on that Sunday, Bankman-Fried met with numerous executives in Nassau, the capital of the Bahamas, to estimate how much outside cash he would need to make up the shortfall at FTX.
The existence of the meeting was confirmed to Reuters by Bankman-Fried.
According to the two people, Bankman-Fried presented many spreadsheets to the leaders of the organization’s regulatory and legal teams that showed FTX had transferred roughly $10 billion in customer funds from FTX to Alameda. According to them, the documents showed how much money FTX lent Alameda and what it was used for.
According to the sources, the paperwork revealed that between $1 billion and $2 billion of these money were not listed among Alameda’s assets. The sources claimed they have no idea what happened to this money, and the spreadsheets did not show where it was moved.
Following an investigation, FTX’s legal and financial teams discovered that Bankman-Fried had added what the two individuals called a “backdoor” to the company’s custom software-made bookkeeping system.
They said that by using a “backdoor,” Bankman-Fried was able to issue orders that may change the company’s financial records without informing anyone else—including outside auditors. They stated that because of this arrangement, FTX had no internal compliance or accounting issues with the transfer of the $10 billion to Alameda.
Reuters received a text reply from Bankman-Fried in which he refuted the use of a “backdoor.”
According to a source having knowledge about the investigation, the U.S. Securities and Exchange Commission is looking into how FTX.com manages customer cash and engages in crypto-lending activities. The source claimed that investigations are also being conducted by the Department of Justice and the Commodity Futures Trading Commission.
The collapse of FTX was a startling turnaround for Bankman-Fried. The 30-year-old founded FTX in 2019 and oversaw its growth to become one of the biggest cryptocurrency exchanges, building up a personal wealth believed to be worth close to $17 billion. FTX was valued at $32 billion in January by investors that included SoftBank and BlackRock.
Major coins’ prices have fallen as a result of the crisis, which has repercussions throughout the cryptocurrency community. And the demise of FTX is being compared to previous significant company meltdowns.
On Friday, FTX announced that it has given John J. Ray III, a restructuring expert who oversaw the liquidation of Enron Corp., one of the worst bankruptcies in history, ownership of the business.
Thanks for visiting our Website usdailyupdates.com
US DAILY UPDATES
1 thought on “At least $1 billion in client assets are allegedly gone from the failed cryptocurrency company FTX.”