Samuel Bankman-Fried’s secret backdoor line of credit sent billions in FTX client funds to Alameda Research
|- Samuel-Bankman Fried ordered the co-founder of his bankrupt crypto exchange FTX to create a secret backdoor to borrow $65 billion in client funds without their permission.
- Gary Wang created the secret line of credit from FTX to Alameda Research without clients' consent and testified over the firm’s implosion.
- FTX's native token, FTT, is recovering from the exchange's collapse and yielded 16.8% gains in the 24 hours between January 13 and 14, 2023.
Samuel Bankman-Fried and his co-founder Gary Wang created a backdoor to allow FTX exchange’s customer funds to be borrowed by the trading firm Alameda Research without client permission. Sources close to the matter revealed that Bankman-Fried moved $10 billion from FTX exchange to Alameda Research, an additional $2 billion is unaccounted for, as reported by Reuters.
Also read: Solana blockchain activity remains high despite FTX exchange’s Chapter 11 proceedings
Sam Bankman-Fried’s backdoor from FTX exchange to Alameda Research
Samuel Bankman-Fried (SBF), former CEO and co-founder of bankrupt crypto exchange FTX asked his co-founder Gary Wang to create a secret line of credit for his trading firm Alameda Research. Investigations in the FTX exchange collapse in November 2022 raised questions on the commingling of customer funds.
Wang’s recent testimony made it clear that SBF borrowed nearly $12 billion from client funds, without their permission and through an illicit channel, “the backdoor.” Sources close to the matter believe the former billionaire moved $10 billion in funds between the two entities and an additional $2 billion that remains unaccounted for, as of January 13.
In December 2022, the regulator filed charges against Wang and Alameda Research CEO Caroline Ellison. The Commodity Futures Trading Commission’s (CFTC), the regulatory agency incharge of cryptocurrencies and virtual assets, alleged that the FTX co-founder created a “virtually unlimited” secret line of credit from the defunct exchange to Alameda Research. Wang's testimony corroborates allegations made by the CFTC.
Wang and Ellison have both pleaded guilty to federal charges and are cooperating with investigators.
FTT price continued its recovery unaffected by the developments in the legal actions taken against the co-founders of FTX exchange. The native token yielded 16.8% gains in the 24-hour period between January 13 and 14, 2022.
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