Alameda Loaned SBF $1B: FTX Bankruptcy Filing

One of the four silo companies that had a significant role in the demise of the FTX bitcoin exchange gave Sam Bankman-Fried, the former CEO of FTX, a personal loan of $1 billion.

According to a legal statement issued by John Ray III, the current CEO of FTX, which was included in active Chapter 11 bankruptcy filings, more money was taken by Bankman Fried.

In accordance with the statement, Alameda Research made a $1 billion direct loan to Bankman-Fried while lending $543 million to FTX’s director of engineering, Nishad Singh.

The man responsible for picking up the pieces after Enron’s disastrous fall, Ray III, was tough in his first petition to the United States Bankruptcy Court for the District of Delaware.

He even said the circumstances were the worst he had ever seen in his professional career, pointing out the “total breakdown of corporate controls” and lack of reliable financial information:

According to the study, “This scenario is unprecedented, from compromised system integrity and inadequate outside regulatory oversight to the concentration of power in the hands of a relatively small number of inexperienced, uninformed and perhaps corrupt employees.”

Audits of accounting, auditing, cybersecurity, human resources, data protection and other systems will be requested as part of the Chapter 11 filing. These regulations will be implemented across four groupings of businesses linked to the corporate structure of FTX.

There were four silos in total. FTX Group Ray III specifies four “silos”, each of which can be seen as an umbrella term for a distinct type of FTX Group business. The “WRS” silo is used to organize businesses owned by West Realm Shires Inc. FTX US, LedgerX, FTX US Derivatives, FTX US Capital Markets and Embed Clearing are some of these companies.

Alameda Research is listed in the petition as a separate silo with separate businesses, although the “Ventures” silo actually consists of Clifton Bay Investments LLC and Ltd, Island Bay Ventures Inc. and Debtor FTX Ventures Ltd. The very last “Dotcom” silo is where FTX Trading Ltd. and other exchanges using the FTX.com name are located.

Ray III’s suit claimed that Bankman-Fried owned all of the silos, with former FTX chief technology officer Zixiao “Gary” Wang and Singh owning negligible stakes in the business. Numerous financial institutions, endowments, sovereign wealth funds and families whose lives were irrevocably changed by the demise of FTX were among the third-party equity investors in the WRS and Dotcom silos.

Bankman Enterprise Fried’s is also charged in the case with a number of additional significant crimes. FTX Group as a whole was found to have neglected to maintain accurate bank account records, “maintain centralized control” over its finances and pay “insufficient attention to the creditworthiness of banking partners.” “

More information is revealed by Ray III, who claims that the WRS silo was the only branch to have undergone a valid audit by a reputable accounting firm. He raises concerns about the Dotcom silo’s independently audited financial records, but he can find no independently audited financial accounts for the Alameda or Ventures silos.

According to the petition, there were also apparently serious flaws in the way the money was distributed.

For example, FTX Set employees used an online “chat” to search for a payment platform. Then a number of supervisors approved payments by responding with various emojis “Reading the section.

Ray III goes on to allege that there was a lack of documentation for activities such as loans, and that company money was used to buy homes and personal property for consultants and workers. Ray III claims that despite the absence of evidence, this actually took place.

The custody of digital assets is uncertain right now.

Custody of bitcoin assets was also in disarray, with insufficient records or safeguards in place for FTX Group’s digital assets, according to the Chapter 11 filing.

The Bitcoin assets held by the major businesses in the network were available to Bankman-Fried and Wang. In Ray III, the “improper activities” are described. “This involves accessing secret keys and extremely sensitive information for the worldwide network of organizations through an unprotected group email account.

In addition, the business did not regularly reconcile its bitcoin holdings and used software to mask misuse of customers’ money. This meant that certain components of the automatic liquidation strategy put in place by FTX.com were subtly omitted from Alameda.

Perhaps the most amazing part of the problem is that the debtors who have filed for bankruptcy have only received “a fraction of the digital assets” that they expected to get back. Despite the fact that cold wallets with a total value of 740 million dollars in cryptocurrency have been seized, it is still uncertain whose silo the funds belong to.