Cryptocurrency exchange FTX has successfully retrieved approximately $7 billion in liquid assets as part of its ongoing efforts to recover customer funds. The search for additional assets is still underway, but the mingling of funds has posed complications.
According to the second interim report released by FTX Debtors on June 26, an estimated $8.7 billion of customer assets were misappropriated, with the majority being fiat and stablecoins amounting to around $6.4 billion. Interestingly, FTX did not differentiate between these two types of assets in its accounting practices.
The report alleges that the former leadership of FTX deliberately concealed their actions with the assistance of a senior FTX Group attorney and others. Forensic accountants, asset tracers, and blockchain analysts have faced significant challenges in distinguishing between the company’s operational funds and customer deposits, making it difficult to trace substantial assets back to their original sources.
A diagram in the report illustrates the flow of FTX customer funds from primary deposit accounts, revealing deceptive tactics such as misrepresentations to banks and false statements.
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The involvement of the unidentified senior FTX attorney is repeatedly emphasized, noting the termination of a less senior attorney who raised objections to the company’s deceptive practices. The misappropriated funds allegedly financed political and charitable donations, as well as the company’s investments and acquisitions, including luxury real estate.
The report also highlights that FTX senior executives, including Sam Bankman-Fried, Gary Wang, Nishad Singh, and Alameda Research CEO Caroline Ellison, informally tracked the undisclosed fiat currency liability to customers resulting from the extensive mingling and misuse of FTX.com customer deposits. Their estimates range from $8.9 billion to $10 billion, slightly higher than the FTX Debtors’ estimate.
As the investigation continues, FTX remains dedicated to recovering customer assets and resolving the situation.
Compiled by Coinbold
