In a recent report shared with a U.S. bankruptcy court, the new management of the bankrupt crypto exchange FTX has claimed that the company lied to banks about accounts commingling customer funds while it was active. The firm's new CEO and chief restructuring officer, John J. Ray III, said FTX mixed customer deposits with corporate funds under the management of former senior executives since the exchange's launch. The report pointed out that some banks questioned the suspicious activities at its sister company Alameda Research in 2020 and started rejecting transfers. - At the time, FTX used the accounts at Alameda Research for customer transactions at FTX.com and made false statements about this activity to the banks.
- In one instance, an Alameda Research employee told a bank that customers occasionally confused FTX and Alameda.
- According to the report, FTX also founded a shell company dubbed North Dimension Inc. to receive customer deposits and fund withdrawals for the exchange, describing it as a crypto trading firm.
- Further, the company fired a senior attorney raising concerns about the North Dimension accounts used to fund customer withdrawals at FTX.
- Besides, the current management reported that it recovered around $7B in liquid assets so far.
- The report also showed that the firm owed customers nearly $8.7B, with more than $6.4B of it in fiat currencies and stablecoins misused by the former management.
FTX, previously the third-largest crypto exchange, filed for Chapter 11 bankruptcy in November 2022, with all the 130 entities under the roof of FTX Group. - The downfall followed the claims that the former CEO Sam Bankman-Fried (SBF) used customer funds in FTX to compensate for losses at Alameda Research.
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