Bankman-Fried Received $1Bn in Personal Loan from His Company
Sam Bankman-Fried, the founder of the FTX exchange and Alameda Research, a cryptocurrency trading platform, seemed to confuse his bank and his companies.
According to John Ray, the new CEO in charge of the restructuring of his empire which went bankrupt on November 11, Bankman-Fried received a personal loan of $1 billion from Alameda.
He is not alone: the firm, which is a kind of cryptocurrency hedge fund, has also lent $543 million in personal loan to Nishad Singh, an associate of Bankman-Friend, and $55 million to Ryan Salame, the co-CEO of FTX Digital Markets, one of FTX’s affiliates.
These loans appear in the white sheet of Alameda given by the Bankman-Fried teams to Ray when the latter took over as CEO on November 11. This restructuring veteran is supposed to be handling the liquidation of FTX and its affiliates who exploded overnight short of cash.
In a 30-page document filed with the United States Bankruptcy court for the District of Delaware. the new CEO painted an unprecedented situation of the former trader’s empire. According to Ray, Bankman-Fried’s empire is in chaos: absence of controls, no meeting of the board of directors, non-existent records in some cases, employees using company funds to buy houses in their name, management communicating via auto-delete messaging app, software to hide customer money misuse etc. It’s a list of everything not to do in a business.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
The new Chief Executive Officer has also asserted that there was software at FTX that allowed management to hide the misuse of customers’ money.
“Unacceptable management practices included the use of an unsecured group email account as the root user to access confidential private keys and critically sensitive data for the FTX Group companies around the world,” the seasoned restructuring veteran blasted in a 30-page document filed with the United States Bankruptcy court for the District of Delaware.
He continued by saying that there was “the use of software to conceal the misuse of customer funds.”
Ray didn’t provide further details. But his statement thus undermines Backman-Fried’s denials that there was a back door allowing him to alter the records without third parties, including auditors and investors, noticing.
Reuters reported last week that FTX’s financials showed that there was a “back door” in the books, created with “bespoke software.” It was described as a way that Bankman-Fried could cook the books without raising any alerts.