FTX restructurers allege SBF, other execs knowingly commingled, misappropriated customer funds since inception

Court documents filed concerning the bankruptcy of cryptocurrency speech FTX allege that its executives, including laminitis Sam Bankman-Fried, knowingly commingled and misused lawsuit funds since the exchange’s inception.

The documents, filed by FTX’s bankruptcy betterment enactment nether CEO John J. Ray III, assertion that Bankman-Fried, co-founder Gary Wang, Director of Engineering Nishad Singh, and others utilized lawsuit and firm funds for speculative trading, luxury spot purchases, task investments, and governmental donations.

“The FTX Group commingled lawsuit deposits and firm funds, and misused them with abandon,” the tribunal filing reads, continuing:

“Bankman-Fried, on with FTX.com’s co-founder, Gary Wang, and Director of Engineering, Nishad Singh (the ‘FTX Senior Executives’), and others astatine their direction, utilized commingled lawsuit and firm funds for speculative trading, task investments, and the acquisition of luxury properties, arsenic good arsenic for governmental and different donations designed to heighten their ain powerfulness and influence.”

According to the tribunal filing, astir $8.7 cardinal successful customer-deposited assets were misappropriated from the FTX.com exchange. While FTX’s enactment nether Ray has repeatedly stressed the trouble successful tracing each of the misappropriated funds, its tribunal filings person continued to bespeak their efforts.

Source: Case 22-11068-JTD Doc 1704 “Notice of Filing Second Interim Report”

FTX filed for bankruptcy successful November 2022, with CEO Sam Bankman-Fried stepping down from his role. The ensuing ungraded has gone down arsenic the largest crypto-related alleged fraud successful history.

John J. Ray III, who replaced Bankman-Fried and has since led the company’s restructuring and betterment efforts, testified earlier Congress successful December 2022, describing the FTX concern arsenic the effect of gross inexperience and a deficiency of basal firm controls. He highlighted the lack of due recordkeeping and the commingling of assets arsenic important challenges successful assessing the last whereabouts of misappropriated funds.

FTX’s bankruptcy betterment enactment continues to enactment connected tracing and recovering assets to maximize recoveries for stakeholders. A 3rd study is expected to beryllium published successful August 2023.

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