Reuters spoke with two sources who held senior positions at FTX until this week. The sources told Reuters that Sam Bankman-Fried, the exchange’s founder and former CEO, secretly moved $10 billion in customer funds from FTX to his trading firm, Alameda Research.
They reported that a significant amount of that money vanished. One source estimated that the amount lost could be about $1.7 billion. The other stated that there was a shortfall of $1 billion to $2 billion. While it is well known that FTX transferred customer funds to Alameda, this is the first time the lost amounts have been mentioned.
Sources claim that Sam Bankman-Fried used a “backdoor” into FTX’s accounting system to siphon money. They claim that this “backdoor” allowed Bankman-Fried to execute commands that could change the company’s financial records without informing others, including outside auditors.
According to these two former employees, Sam Bankman-Fried showed several spreadsheets to the heads of the company’s regulatory and legal teams, which revealed that FTX had transferred approximately $10 billion from FTX to Alameda. These spreadsheets detailed the amounts FTX had loaned to Alameda and how they were used.
The sources say that between $1 billion and $2 billion of these funds were not counted among Alameda’s assets. The spreadsheets do not show where this money was transferred, and the sources said they have no idea what happened to it.
Currently, the US Securities and Exchange Commission is closely examining FTX.com’s handling of customer funds as well as its crypto-currency lending activities. The Department of Justice and the Commodity Futures Trading Commission are also looking into the matter.
Sam Bankman-Fried’s response
In response to the allegations, Bankman-Fried told Reuters that he was “disagree with the characterization“of the $10 billion transfer.
“We have not made any secret transfer“, he explained. “We had confusing internal labeling and misread it” he said, without elaborating.
Asked about the missing money, Bankman-Fried texted back, “???? “.
Further details are expected regarding the missing funds.