The new CEO of FTX, John Ray, III, revealed several wild and shocking items found in the collapsed company’s bankruptcy filing, which include the founder and former CEO Sam Bankman-Fried lending himself $1 billion, and FTX corporate funds being used to buy personal homes, among other things.
Here are five of the wildest things found in FTX’s bankruptcy filing, according to a report by Market Watch.
1. FTX lent billions of dollars in customer funds to Bankman-Fried’s hedge fund, Alameda Research.
Alameda Research reportedly loaned just over $4 billion out to Bankman-Fried and his closest business partners. On Thursday Ray revealed that Alameda had made $4.1 billion of related-party loans, which remained outstanding at the end of September.
Among these loans included a staggering $1 billion loan made to Bankman-Fried himself, as well as a $543 million loan made to FTX co-founder Nishad Singh, and $55 million to co-CEO Ryan Salame.
2. FTX corporate funds were used to buy homes and “personal items” for executives.
Bankman-Fried was living in a penthouse located in a luxury resort in the Bahamas, where FTX was also based. There, corporate FTX funds “were used to purchase homes and other personal items for employees and advisors,” according to bankruptcy filings.
Ray also noted that there is no documentation for transactions and loans regarding these real estate purchases, and that they were recorded in the personal name of employees and advisors.
Bankman-Fried has since put his 12,000-square ft. penthouse in the Bahamas up for sale for nearly $40 million.
3. Expenses approved by emoji.
Ray also said that FTX employees “submitted payment requests through an online ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”
4. Auditors living in the metaverse.
The new FTX CEO revealed that Bankman-Fried secured audit opinions for the company’s international trading platform from Prager Metis, a firm that Ray had never heard of before.
When Ray went to Prager Metis’ website to learn more about the company, he found that it describes itself as the “first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland,” he said.
5. Most digital assets “owned” by FTX have not been secured
Ray said that as of Thursday, he has only been able to locate and secure just “a fraction of the digital assets” he hoped to recover from the various FTX trading and exchange platforms and Alameda Research.
The new FTX CEO added that only some $740 million of cryptocurrency has been secured in new cold wallets. He also cited at least $372 million of unauthorized transfers that had taken place on the day FTX and Alameda filed for bankruptcy. Ray said there was also “dilutive ‘minting’ of approximately $300 million in FTT tokens by an unauthorized source” in the days following the bankruptcy filing.
“FTT tokens were created by FTX to facilitate trading on its exchange and made up a big chunk of Alameda’s assets,” Market Watch notes.
The company collapsed last week, shortly after Bankman-Fried told investors that FTX was facing a major shortfall of up to $8 billion from withdrawal requests and needed emergency funding.
After that, FTX filed for bankruptcy, and then Bankman-Fried announced his resignation, and said that Alameda Research would be shutting down. The disgraced FTX founder has since put his 12,000-square ft. penthouse in the Bahamas up for sale for nearly $40 million.
Bankman-Fried, who had an estimated net worth of $16 billion last week, is now completely broke, according to calculations by Bloomberg — an incident that the outlet referred to as “one of history’s greatest-ever destructions of wealth.”
You can follow Alana Mastrangelo on Facebook and Twitter at @ARmastrangelo, and on Instagram.
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