FTX founder Sam Bankman-Fried handled FTX like a “private fiefdom,” as he and a handful of shut associates funneled thousands and thousands from the now-defunct crypto trade to fund buy of Bahamas luxurious actual property, lawyer for the corporate have mentioned in a court filing.
James Bromley, the lawyer representing FTX throughout its chapter hearings, blamed Bankman-Fried for operating the corporate to floor. Bromley accused Bankman-Fried in court docket of operating FTX like a “private fiefdom” and finally demonstrating that “the emperor had no garments.”
“This firm was run by inexperienced, unsophisticated and doubtlessly personally compromised people…It is likely one of the most abrupt and troublesome firm collapses within the historical past of company America,” Bromley informed the decide.
“Sadly, the FTX debtors weren’t significantly properly run, and that’s an understatement…Now we have most likely witnessed some of the abrupt and troublesome company collapses within the historical past of company America,” Bromley added.
Below Bankman-Fried’s watch, “substantial quantities of cash had been spent on issues not associated to the enterprise,” Bromley said.
Attorneys representing the corporate mentioned that $300 million was splurged to purchase mansions and beachfront trip properties for Bankman-Fried and different senior FTX executives.
Reuters reported that Bankman-Fried’s dad and mom, Stanford legislation professors Joseph Bankman and Barbara Fried, had been amongst these in FTX’s shut circle who acquired luxury property in the Bahamas.
FTX was the second-largest centralised crypto trade on the planet, till a number of days in the past. With marquee traders like Sequoia, Softbank, and Temasek, FTX had rapidly change into the second-largest trade on the planet with every day volumes touching $ 2 billion throughout its peak.
On Nov 11, the corporate filed for chapter as it’s unable to satisfy its monetary obligations.
Bankman-Fried started his entrepreneurial journey by founding Alameda Analysis, a proprietary buying and selling agency that traded in crypto-currency. Later, Bankman-Fried based FTX to maneuver from being only a dealer to turning into the market itself. FTX went forward and created its personal token, FTT. Anybody who owned FTT would obtain advantages equivalent to decrease buying and selling charges.
After Alameda Analysis confronted losses in its enterprise, funds had been transferred from FTX to Alameda – and these funds included buyer fiat cash deposits and FTT tokens.
Consequently, practically a 3rd of Alameda’s property price $ 14.6 billion, had been held within the type of FTT tokens. Alameda’s stability sheet was leaked on Coinbase, which precipitated concern amongst customers and traders, given the group’s precarious monetary scenario.
Alameda had used its property to borrow for its enterprise operations and had round $7.4 billion in debt in response to its stability sheet. It’s speculated that its FTT tokens had been collateral for the loans it took. And due to this fact, a collapse within the worth of the collateral (FTT tokens) would have despatched your complete group right into a tailspin. Therefore, the worth of FTT tokens gained immense significance for the FTX group.