- A finding by Reuters alleged that over $1 billion of customer funds vanished from FTX’s coffers.
- FTX’s former CEO reportedly transferred $10 billion of customer funds to Alameda, most of which is lost.
- The exchange has liabilities of $10 to $50 billion with over 100,000 creditors.
As the embattled FTX crypto exchange ultimately filed for bankruptcy on November 11, more details about the mismanaged customer funds have surfaced.
According to a finding by Reuters, at least a billion dollars of customer funds on the exchange had vanished from FTX’s coffers. The report also alleged that Sam Bankman-Fried, FTX’s CEO until its bankruptcy, had secretly transferred $10 billion of customer funds from FTX to Alameda, and a large portion of it has since disappeared.
Alan Wong, the manager of Hong Kong Digital Asset Exchange, said:
With a gap of $8 billion between liabilities and assets, FTX’s insolvency will trigger a domino effect, leading to a series of investors related to FTX going bankrupt or being forced to sell assets.
Wong added that in an illiquid bear market, “the event will lead to a new round of cryptocurrency declines and a liquidation of leverage.”
Previously, FTX was one of the top-ranking crypto exchanges, right behind Binance, the largest crypto marketplace. The news of its insolvency triggered a wave of price crashes, putting Bitcoin at a two-year low of $15k within a week. Its native token, FTT, plunged 30% on Friday, bringing its collapse this month to 91%.
FTX claimed in its bankruptcy filing that the firm has assets worth between $10 billion and $50 billion, liabilities between $10 billion and $50 billion, and more than 100,000 creditors. Upon filing for bankruptcy, Bankman-Fried stepped down from the position of chief executive officer, handing the responsibility to a restructuring specialist, John J. Ray.
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