FTX restructurers allege SBF, other execs knowingly commingled, misappropriated customer funds since inception

Documents filed with the court regarding the bankruptcy of the virtual currency exchange FTX claim Executives, including founder Sam Bankman-Fried, have deliberately mixed and misused customer funds since the exchange’s inception.

of documentThe filing was filed by FTX bankruptcy turnaround leaders under CEO John J. It alleges that Singh and others used client and corporate funds for speculative transactions, purchases of luxury real estate, and venture investments. , and political contributions.

“FTX Group conflated customer deposits with corporate funds and misused them ruthlessly,” the court filing said, adding:

“Bankman-Fried, along with FTX.com Co-Founder Gary Wang, Director of Engineering Nishad Singh (“FTX Senior Executives”), and others at their direction, will continue to invest in the funds of our customers and companies. were mixed and used for speculative trading and venture investments. This includes investments, purchases of luxury real estate, as well as political and other contributions aimed at increasing one’s power and influence. “

About $8.7 billion of customer-entrusted assets were diverted from the FTX.com exchange, according to court filings. The leadership of FTX, led by Ray, has repeatedly stressed the difficulty of tracking all the misappropriated funds, but court filings continue to reflect their efforts.

FTX filed for bankruptcy in November 2022, with CEO Sam Bankman-Fried stepping down. The ensuing scandal is on record as the largest crypto-related fraud allegation in history.

John J. Ray III, who succeeded Bankman-Fried and has since spearheaded the company’s turnaround and restructuring efforts, testified before Congress in December 2022 that FTX’s situation was marked by extreme inexperience and fundamentals. explained that it was the result of a lack of corporate governance. He highlighted the lack of proper record keeping and asset commingling as significant challenges in assessing the ultimate whereabouts of misappropriated funds.

FTX’s bankruptcy recovery leadership remains committed to asset tracking and recovery to maximize stakeholder recovery. A third report will be published in August 2023.

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