Sam Bankman-Fried, the founder of crypto exchange FTX, has secretly transferred $10 billion in client money to his own investment company. At least a billion dollars of that money is missing. That reports Reuters news agency.
It is not clear whether the money was stolen. FTX itself refers to “unauthorized transactions”, where The Wall Street Journal writes that hackers have stolen more than 370 million dollars worth of crypto from the crypto exchange. The missing money came to light during a Bankman-Fried meeting with lawyers, who looked at how much money was needed to cover the deficits of the ailing stock market.
Bankman-Fried would have shown during that meeting that he had borrowed ten billion dollars from FTX to his investment company Alameda. However, between one and two billion dollars could not be found in the records. It was later discovered that Bankman-Fried had built a so-called “backdoor” into FTX’s accounting system, which allowed him to withdraw money from the crypto exchange without accountants noticing. In this way, he would have been able to transfer the ten billion dollars without any problems.
Also read: The Fall of Crypto Exchange FTX: Drama with a Hero and a Villain
Demise of FTX
FTX, one of the major crypto exchanges in the world, filed for bankruptcy on Friday after investors and crypto holders withdrew their funds en masse from the platform this week. The reason was reports about how Bankman-Fried had used money from FTX on a large scale to finance his company Alameda. Alameda herself had suffered losses earlier this year on bailouts of ailing crypto firms.
The value of FTX’s own crypto, which is called FTT, subsequently plummeted. Investors withdrew $6 billion in crypto from the FTX within three days, which then ran into acute cash shortages, especially when a takeover attempt by competitor Binance failed. Other cryptocurrencies also saw their value plummet afterwards. After the bankruptcy of FTX, which was still worth $ 32 billion in January, Bankman-Fried left as CEO of the crypto platform.