FTX Accused of Misusing Customer Deposits, Purchasing Luxury Properties, and Involving Subsidiary in Alleged Fraudulent Activities

B. Ali
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FTX Trading Ltd., widely recognized as FTX, has recently made headlines due to its financial insolvency. In its latest report issued on Monday, the company leveled serious allegations against its co-founder, Sam Bankman-Fried, and other high-ranking executives, suggesting their involvement in illicit activities.

According to the report, it is claimed that they mixed customers’ funds with the company’s assets and misused them for personal gain. They allegedly spent $243 million on expensive homes for senior staff and their families, as well as on business properties. This means they might have used customers’ money for personal things instead of keeping it separate like they should have.

FTX Accused of Misusing Customer Deposits and Owed $8.7 Billion

According to a second report by FTX debtors, FTX.com misused customer deposits for a long time, which made it very hard to track specific transactions and tell the difference between the company’s money and customer assets. However, the report reveals that when FTX.com filed for bankruptcy, it owed customers a whopping $8.7 billion.

It is worth noting that the current CEO of FTX, John J. Ray III, stated that right from the start, FTX Group mixed customer deposits with company funds and used them improperly under the guidance of previous senior executives. In simpler terms, FTX pretended to care about customers but mishandled their money, which is not good at all.

SBF and FTX Entities Accused of Fraudulent Transactions; Unnamed Lawyer Allegedly Involved

The court filing claims that Sam Bankman-Fried (SBF), senior executives, several FTX-controlled entities, and Alameda Research used various bank accounts and hid complex transactions through an undisclosed entity.

Furthermore, the filing alleges the involvement of an undisclosed attorney, referred to as “Attorney-1,” who is accused of actively facilitating and enabling the fraudulent actions attributed to SBF.

The report claims that a lawyer, referred to as “Attorney-1,” instructed senior FTX officials to create a false register of members and managers, which they submitted to a bank. This lawyer also allegedly helped senior executives and Sam Bankman-Fried (SBF) in creating a fake payment agreement. These actions were aimed at giving legitimacy to unlawful transfers and arrangements within the FTX Group.

As a result, investigators believe that this misconduct allowed customer assets to be mixed and wrongfully used by the FTX Group. The report also mentions retaliation against an employee who raised concerns about mixing funds.

However, this misconduct involves the purchase of residential and commercial properties worth around $243 million, mostly located in the Bahamas. A significant portion of the funds went towards buying units in the exclusive Albany Charles development, a luxury resort community on New Providence Island.

Albany is known for its lavish amenities and is popular among the world’s wealthiest individuals. It has been alleged that a luxurious 11,500-square-foot penthouse located in the Orchid Building was shared by several individuals, including SBF, Nishad Singh, Gary Wang, Caroline Ellison, and others who have been implicated in the matter.

FTX Group Allegedly Used Subsidiary for Real Estate Acquisitions and Funneled Customer Deposits

Attorneys claim that the FTX Group used a subsidiary called FTX Property Holdings Ltd., registered in the Bahamas in July 2021, to acquire most of the real estate. They allege that a lawyer, referred to as “Attorney-1,” directed the registration.

The report suggests that a former Bahamian official helped expedite FTX Digital Markets’ licensing within just six weeks, with significant funds flowing through the Bahamian entity. The document states that the FTX Group used FTX DM accounts as an intermediary, channeling at least $5.4 billion in customer deposits to FTX Trading Ltd. in their operations.

 

About B. Ali PRO INVESTOR

Live webinar speaker and derivatives (Forex, Crypto, and Indices) analyst with a broad range of skills for evaluating financial data, investment trends, technical analysis, fundamental analysis, and the best ways to strategies investment selection.  Expertise: Trading Psychology; Speculative Positioning & Market Sentiment; Technical & Fundamental Analysis.