A new report details the investments and “charitable” works of former FTX executives. Between YouTube channel, book order and house for sale, some of them are far from the realm of cryptocurrencies… And they would have been made with the funds of the exchange platform’s customers.
Strange investments at FTX
The autopsy of the FTX platform continues under new temporary CEO John Ray III. Regular reports are being published, and many cases of mismanagement are gradually coming to light. Yesterday, a new document revealed the extent of the FTX empire’s ‘charitable’ investments, and how customer funds were allegedly used.
Sam Bankman-Fried made a name for himself as a billionaire CEO with a particular penchant for charity work. We now know that this was “just a front”, according to Bankman-Fried himself. Some of the company’s investments are proof of this
FTX subsidies have indeed been distributed to strange projects, and far from the cryptocurrency sector. For example, $400,000 was allegedly directed to “an entity that published animated videos on YouTube, on the theme of rationalism and effective altruism”. Another content creator also received $300,000 to write a book on “how to find the useful function of humans”. In another “investment”, FTX funds (and those of clients, according to the accusations) were used to buy a house in the Bahamas, valued at $1.8 million.
Mixed funds and intertwined connections
The autopsy of the FTX nebula reveals not only strange investments, but also particularly intricate links between companies and entities. In the following graph, we can see that customer funds deposited on the exchange platform were used to finance a variety of entities, all linked to each other:
hell of a flow chart from an FTX bankruptcy filing, showing commingled funds pic.twitter.com/bpA5jPv88t
– Molly White (@molly0xFFF) June 27, 2023
The FTX affair is therefore particularly far-reaching, and the forthcoming trial will undoubtedly be complex. The mixing of customer funds with the company’s own funds is particularly problematic, and shows the impunity with which the platform’s directors operated before its collapse. As John Ray III points out, there was a huge gap between the perception of FTX and the reality:
The image that the FTX Group sought to project as a customer-focused leader of the digital age was a mirage. Since its inception the FTX Group has mixed customer deposits with corporate funds, and misused them with abandon, on the orders of its former executives. “
This is also a particularly topical issue. Since the fall of FTX, mistrust reigns where exchange platforms are concerned. Binance, for example, was accused last May of mixing billions of customer funds with its own revenues. We should therefore continue to see particularly strict scrutiny of the funds of crypto exchange platforms.
