FTX Engaged in Shady Wire Transfers Since 2020
FTX Engaged in Shady Wire Transfers Since 2020
FTX, the once-prominent crypto exchange, is facing severe accusations of commingling and misappropriation of customer funds.
These allegations have emerged following the release of a second investigative report by FTX debtors on June 26, 2023, shedding light on the exchange's actions leading up to its unprecedented collapse in November 2022.
The report, published by PRNewswire, alleges that FTX utilized customer funds to offset losses incurred by a sister company, Alameda Research, which is also owned by prominent figure Sam Bankman-Fried.
It claims that the now-bankrupt exchange engaged in deceptive wire transfers and misrepresented the purpose of these transactions to banks.
New FTX CEO, John Ray III, has come forward to assert that the former management deliberately misled banks about the true nature of these transfers, which began in 2020, as reported by DeCrypt.
Furthermore, Ray claims that the wire transfers were used for personal gain, including the acquisition of luxury properties and engaging in speculative trading positions at Alameda.
Certain banks detected suspicious activities and began rejecting money wires to and from Alameda, compelling FTX to explore alternative avenues within the US banking system.
As of the investigation's publishing date, FTX finds itself burdened with a substantial debt of $8.7 billion owed to its customers, leading to its Chapter 11 bankruptcy filing in November 2022 before the District Court of Delaware.
CoinTelegraph reports that the defunct crypto company has managed to recover $7 billion in liquid assets thus far. The recovered funds are approximately worth $6.4 billion in fiat and stablecoins.
Furthermore, several politicians and private institutions have expressed their commitment to returning donation funds that were originally distributed as part of Bankman-Fried's effective altruism mission.
The FTX collapse has sent a strong signal of the importance of regulatory oversight and transparency within the digital asset sector. According to CoinDesk, the event has wiped out an estimated $200 billion off the crypto market.
