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FTX inner circle helped itself to $3.2B, liquidators say

SBF alone pocketed $2.2B, or so this bankruptcy paperwork goes

In fresh filings in the FTX bankruptcy case, the cryptocurrency-exchange-slash-hedge-fund's liquidators say they've uncovered $3.2 billion (£2.6b) in payments and loans made to disgraced FTX founder Sam Bankman-Fried and his inner circle. 

The revelation can be found in the schedules of assets and liabilities and statements of financial affairs that FTX and its 101 affiliated debtors filed in court on Wednesday.

FTX, under the control of liquidators since November, summarized its findings in a press statement, adding that the $3.2 billion figure doesn't include more than $240 million spent on luxury properties in the Bahamas, any unlawful political or charitable donations, nor any "substantial transfers to non-debtor subsidiaries in the Bahamas and other jurisdictions," the company said.

Some of the properties purchased have been seized by FTX debtors or governments, the now-imploded crypto-exchange said, and it added it can't predict the timing nor total amount of eventual recoveries at this point. In other words, there's still a lot of FTX-linked assets out there that have yet to be discovered.

"Ongoing efforts by the FTX debtors are expected to result in the further identification of assets, liabilities and transfers, including a description of intercompany claims among the FTX debtors and their subsidiaries," FTX said.

Of the $3.2 billion that was said to be distributed to SBF's inner circle, $2.2 billion of it went to Bankman-Fried himself, said FTX's latest management. Nishad Singh, former co-lead engineer at FTX, made off with $587 million, while former Alameda Research CEO Caroline Ellison and FTX CTO Zixiao "Gary" Wang banked $6 million and $246 million, respectively, it is claimed.

Alameda Research, which was co-founded by Bankman-Fried, operated as a cryptocurrency-trading hedge fund that siphoned billions from FTX and its customers' deposits, according to America's financial watchdog the SEC. Alameda plowed that cash into startups and other ventures. Singh, Ellison, and Wang have admitted criminal charges of fraud brought by the US federal government.

Sam Trabucco, former co-CEO of Alameda who left the company in August 2022 and who hasn't been charged as part of the FTX fallout, is said by the liquidators to have exited with $25 million. Ryan Salame, former co-CEO of FTX, was enriched by $87 million, according to the documents. Salame has also not been charged, having reportedly been a whistleblower who tipped Bahamian officials off to financial malfeasance at FTX.

In January, FTX's liquidation leadership said it had already recovered $5.5 billion in assets, and also said $415 million in crypto was stolen in a hack of the company's systems in November, right around the time the company fell apart.  

That collapse basically amounted to a bank run when worried investors started trying to withdraw their funds over concerns the company may not have been entirely solvent. FTX customers were unable to claw back all of their dosh because the biz had mismanaged its books to the point where John Ray III, FTX's liquidation CEO who previously oversaw the implosion of Enron, said things at FTX were actually worse than that 2001-era scandal. It was reported that at least $1 billion in customer funds were missing.

To summarize the underlying problem: FTX and Alameda relied on a crypto-token FTX created called FTT; the coin helped prop up the value of Alameda. The value of FTT crashed when Binance said it was going to sell off its own big pile of the token. There was also word of government investigations into FTX and fears over its true financial state. That wasn't just bad news for Alameda, it also drove people to withdraw their funds from FTX, which didn't have the money on hand and started bankruptcy proceedings. What exactly happened to the business and customers' deposits is the subject of the above mentioned prosecutions and forensic accounting by the liquidation management.

Bankman-Fried, who is out on a $250 million bond and house arrest at his parent's home in Palo Alto, California, has been charged with 12 counts in the US government's most recent indictment against him. 

Included in those charges are conspiracy to commit bank fraud, operating an unlicensed money transmission business, committing money laundering, making unlawful political contributions, and defrauding America's Federal Election Commission. 

SBF is scheduled to go on trial this October, and by then any number of discoveries could be made and additional charges levied. ®

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