The FTX Crisis: Bankman-Fried Under Fire For Fund Mismanagement

0
3

SBF

The post The FTX Crisis: Bankman-Fried Under Fire For Fund Mismanagement appeared first on Coinpedia Fintech News

A report has surfaced that details communications between the United States and Bahamian officials regarding investigations into FTX. The report indicates that officials from the Bahamas Financial Services Board (SBF) were warned by several officials about the significant amount of bad loans accumulated by Alameda Research against FTX.

According to the report, one of the FTX executives, designated as CC-2, was reportedly alarmed upon learning from another executive (CC-1) that the hedge fund Alameda Research owed $13 billion to FTX.

However, the SBF disregarded these warnings and argued that the firm would raise more capital before crypto prices increased, thereby solving the problem.

Was SBF Exploiting Customer Funds?

The Bahamas Financial Services Board (SBF) has been accused of using stablecoin issuer Tether (USDT) to print money out of thin air. Tether, however, has denied these claims, despite losing its largest customer, FTX. At its peak, FTX had minted over $36 billion in USDT, which represented nearly half of Tether’s entire circulating supply.

According to court filings, some of the biggest investors in FTX include football star Tom Brady, New England Patriots owner Robert Kraft, and fashion model Gisele Bündchen. Additionally, well-known funds run by Tiger Global, Thoma Bravo, Sequoia Capital, SkyBridge, and Third Point, among others, were also investors in FTX.

Despite having high-profile investors, FTX was unable to recover due to the heavy losses incurred over the years from Alameda Research. Reports indicate that FTX customers’ funds were used for political donations, to sponsor Formula One races, and for hosting high-end parties around the world.

As a result, the $5 billion in assets recovered by the new FTX officials, including acting CEO John Ray III, cannot make up for the losses incurred by Alameda.

It remains to be seen whether FTX creditors will have the patience to wait until the end of the next crypto bull market, in order to recoup their investments. Notably, this is a significant uncertainty, especially considering that many of the tokens on FTX’s balance sheet are illiquid, including the FTT token.