© Reuters. More Mismanaged Fund Insights Emerge After FTX’s Bankruptcy Filing
- A Reuters discovery alleged that more than $1 billion in client funds had disappeared from FTX’s vaults.
- The former FTX CEO allegedly transferred $10 billion in client funds to Alameda, most of which is lost.
- The exchange has liabilities of $10 billion to $50 billion with over 100,000 creditors.
As embattled crypto exchange FTX finally filed for bankruptcy on Nov. 11, more details about mismanaged client funds have surfaced.
According to a Reuters discovery, at least $1 billion in client funds on the exchange had disappeared from FTX’s vaults. The report also alleged that Sam Bankman-Fried, CEO of FTX until its bankruptcy, secretly transferred $10 billion in client funds from FTX to Alameda, and that much of those funds have since disappeared.
Alan Wong, Director of Hong Kong Digital Asset Exchange, said:
With an $8 billion gap between liabilities and assets, FTX’s insolvency will trigger a domino effect, leading to a series of FTX-linked investors going bankrupt or being forced to sell assets.
Wong added that in an illiquid bear market, “the event will lead to another round of cryptocurrency declines and leverage sell-off.”
Previously, FTX was one of the top crypto exchanges, second only to Binance, the largest crypto exchange. News of his insolvency set off a wave of price drops, hitting a two-year low of $15,000 within a week. Its native token, FTT, plunged 30% on Friday, taking its collapse this month to 91%.
FTX claimed in its bankruptcy filing that the company had assets worth between $10 billion and $50 billion, liabilities between $10 billion and $50 billion, and more than 100,000 creditors. Upon filing for bankruptcy, Bankman-Fried resigned as chief executive, handing the responsibility to a restructuring specialist, John J. Ray.
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