According to court documents obtained by Bloomberg and Financial Times, FTX, a cryptocurrency exchange that previously collapsed, transferred approximately $3.2 billion to its founder Sam Bankman-Fried and other key employees. The funds, in the form of payments and loans, were mostly from trading company Alameda Research.
The filings, submitted by FTX’s new management to a bankruptcy court in Delaware, reveal that Bankman-Fried received approximately $2.2 billion. However, these transfers do not include $240 million spent on luxury property in the Bahamas, political and charitable donations, and substantial transfers to subsidiaries both in the Bahamas and elsewhere.
FTX management has expressed their intention to investigate ways to retrieve these transfers to Bankman-Fried and his former colleagues, but the amount and timing of any possible monetary recoveries remain unknown. Additionally, further forensic analysis is expected to uncover more assets, liabilities, and transfers.
Recently, Bankman-Fried was arrested in the Bahamas following criminal charges brought by US federal prosecutors, including conspiracy, wire fraud, and money laundering, all related to the misuse of billions of dollars in customer funds prior to FTX and Alameda Research’s $9 billion loss.
The Massachusetts Institute of Technology graduate rode a boom in the value of Bitcoin and other digital assets to build an estimated net worth of $26 billion. FTX collapsed last November after a wave of withdrawals and consequently declared bankruptcy on November 11, wiping out Mr Bankman-Fried’s fortune. He later said he had $100,000 in his bank account. Mr Bankman-Fried’s loss of a $16 billion fortune overnight has been described as the biggest one-day loss on the Bloomberg Billionaires Index.
The 30-year-old is currently on bail after signing a $250 million package in December that effectively placed him under house arrest at his parents’ home in California until a trial that is set to begin in October. FTX’s new management, including restructuring expert and chief executive John Ray, are seeking to track billions of dollars of assets linked to the crypto exchange that can be eventually returned to the millions of customers whose accounts have been frozen since its collapse. The administrators of FTX identified other transfers as part of the overall $3.2 billion.
Three FTX insiders who have pleaded guilty and are co-operating with prosecutors — Nishad Singh, Gary Wang and Caroline Ellison — were transferred about $839 million in total, according to FTX. Two other former FTX executives, Ryan Salame and John Trabucco, were said to have together received more than $100 million. FTX International and Alameda were both independently profitable businesses in 2021, each making billions. Then Alameda lost about 80 per cent of its assets’ value over the course of 2022 due to a series of market crashes. FTX was also affected by Alameda’s decline.
The FTX founder’s trial is scheduled to start on October 2. Mr Bankman-Fried and fellow founder Mr Wang bought a stake of about 7.6 per cent in stock trading app Robinhood last year for $546 million, according to an affidavit in December. The pair borrowed the money from Alameda Research and purchased the shares in four tranches through a holding company in Antigua.