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New Investigative Report Reveals Allegations of Fund Misuse and Lavish Spending by Former FTX Executives

27 June 2023
in News
Reading Time: 3 mins read
101 8
Home News

FTX Debtors, released their second investigative report on June 26, 2023, and it contains allegations of misappropriation of funds and extravagant spending on unrelated projects by former executives of the bankrupt company. The report focused on the misuse of client funds and shed light on charitable contributions made through the nonprofit FTX Foundation.

According to the report, the FTX Foundation distributed $700,000 in “grants”, with $400,000 allegedly given to an entity producing animated YouTube videos unrelated to cryptocurrencies or Web3. Another $300,000 grant was awarded to an individual for publishing a book exploring human utility functions. 

The report revealed that these “grants” were funded using a combination of FTX customer funds held in various bank accounts controlled by FTX, Alameda Research, and affiliated businesses.

The report also exposed the inclusion of a $1.8 million property named “Pineapple House” in FTX’s portfolio of Bahamian properties worth $243 million. It is alleged that this property was purchased using client funds, further deepening the misconduct.

In a press release accompanying the report, John J. Ray III, CEO and Chief Restructuring Officer of the FTX Debtors, condemned the actions of the previous senior executives, stating that the image portrayed by the FTX Group as a customer-focused digital leader was nothing but an illusion. 

Ray stated:

“The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage. From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives.” 

This investigative report is part of the ongoing review of FTX’s activities leading up to its Chapter 11 Bankruptcy filing. The first report exposed failures in critical areas such as management, finance, digital asset management, information security, and cybersecurity.

Looking ahead, the FTX Debtors are expected to release the third report in August 2023. The release of these reports marks a crucial step in uncovering the extent of the misconduct and working towards a resolution for FTX and its affected clients.

John Ray III also announced that they have successfully recovered approximately $7 billion in liquid assets thus far, with ongoing efforts to locate additional funds. However, the mingling of assets has presented challenges to their recovery efforts. The FTX Debtors estimate that the total value of client assets misused amounts to $8.7 billion, with around $6.4 billion held in fiat and stablecoins, which were not appropriately accounted for in FTX’s records.

 

If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.

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Durotimi Aribisala

Durotimi Aribisala

Durotimi is a writer who is interested in writing about emerging technologies such as blockchain, Web3, crypto, and AI. He studied business administration and management. He desires to be an entrepreneur and movie director sometime in the future.

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