Sam Bankman-Fried may arise as one of the most talked about and written about billionaires in modern history, but you know what won’t be reported? The exact whereabouts of the funds he managed, to the tune of nearly $9 billion dollars, seems to have disappeared without a trace.
How does one lose $9 billion exactly? That seems to be the question of the week amongst crypto investors. And it looks like Sam Bankman-Fried not only has very little to add but also doesn’t seem to know where the missing funds are or even could be.
FTX says it has discovered an $8.9 billion deficit in customer funds that it cannot account for. This is the first time the bankrupt cryptocurrency exchange has ascertained how much money has gone missing.
Where Did All the Money Go?
Reports indicate that FTX handles approximately $11.2 billion in customer deposits. However, only about $2.6 billion can be accounted for.
In a presentation titled Preliminary Analysis of Shortfalls at FTX.com, the company announced that it has finally inventoried all wallets associated with the company and the initial fall with Alameda Research.
According to the entity, there is a “massive shortfall” because it has been unable to identify customer assets worth more than $2.2 billion. Only $694 million is considered to be the actual currency in circulation. Compared to the $11.2 billion in outstanding funds that were locked to customer accounts, this leaves approximately $9 billion lost to the entity’s former leadership.
Sam Bankman-Fried, the disgraced former CEO of FTX, is currently facing 12 federal charges and other investigations relating to the transfer of customer funds to the hedge fund Alameda Research (in case you forgot).
Did It All Go to Almeda?
Analysts have tracked losses, and there is much to see. The presentation implies that a significant portion of the missing funds resulted from the alleged scheme of former CEO Sam Bankman-Fried to transfer customer funds from the exchange to his hedge fund, Alameda Research.
The presentation revealed that Alameda borrowed a net of $9.3 billion from FTX.com wallets and accounts; however, it is unclear how much of the shortfall is attributable to missing customer funds. Previously, the Securities and Exchange Commission asserted that Alameda had more than $8 billion of FTX customer funds in its accounts.
New and court-appointed custodian CEO of FTX, John Jay Ray III, went on to say,
“It has taken a huge effort to get this far… The exchanges’ assets were highly commingled, and their books and records are incomplete and, in many cases, totally absent. For these reasons, it is important to emphasize that this information is still preliminary and subject to change. We believe it is more important to provide transparency to stakeholders by making this information public now than to wait until we can achieve certainty.”
FTX Gambled With Customer Funds
In January, a law firm representing the bankrupt exchange disclosed in court documents that it had located $5.5 billion in crypto and fiat assets in customer accounts and other company divisions. The attorneys argued that these digital currencies should be easily converted into cash assets. However, it is unclear how much of these identified funds have been accounted for in this presentation.
Finally, the company has a billion-dollar deficit in multiple tokens, including bitcoin and Ethereum, as well as smaller amounts of money in coins like FTX’s native token FTT. According to reports, the crypto entity should have $922 million in ETH assets, but they only have $52 million. That equates to $870 million in ETH missing.
What exactly did Alameda do with the money? They basically “borrowed” it from customers and then lost the majority of it on risky leveraged trading. Plain and simple.
