At least $1 billion (Ksh230 billion) in FTX customers’ funds have vanished from the collapsed crypto exchange. The exchange’s founder and former CEO Sam Bankman-Fried quietly transferred $10 billion of customer funds from FTX to its sister trading company, Alameda Research, and now a big chunk of that total is missíng, a report Reuters said.
One of the sources, who Reuters said held a senior position at FTX until this week, estimated about $1.7 billion cannot be accounted for. The other, also briefed on the exchange’s finances by top staff, gave a range of $1 billion to $2 billion.
FTX users have scrambled to get their money off of FTX via alternative assets after the exchange froze withdrawals before filing for Chapter 11 bankruptcy protection on Friday. The crypto exchange collapsed after facing a liquidity crunch that saw Bankman-Fried in need of an $8 billion injection.
Rumours about FTX’s insolvency prompted a bank-run like dash by customers to withdraw funds last weekend, which saw about $6 billion pulled out of the crypto exchange in just 72 hours.
Last week, Bankman-Fried shared documents with other FTX executives that showed the missíng funds, Reuters reported. The materials revealed a “back door” into the company’s books built using bespoke software.
The sources said the “backdoor” allowed Bankman Fried to alter the company’s financial records without alerting other people. That meant the transfer of $10 billion did not set off any alarms, they said.
But Bankman-Fried told Reuters he “disagreed with the characterization” of the transfer. He said: “We didn’t secretly transfer” and “We had confusing internal labeling and misread it.”
He also responded to Reuters with “???” when he was asked about the missíng funds.
As FTX was a leading crypto exchange seen as solid, its troubles have weighed heavily on the ecosystem, and many are worried other crypto firms could suffer risks to their solvency as a crisis of confidence spreads.
Leading cryptocurrencies bitcoin and ethereum have fallen about 19% in the last seven days, according to CoinMarketCap. FTX did not immediately respond to request for comment. [ THE INSIDER ]
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