- 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch
Bitcoin price continues to edge down, trading below $95,000 on Friday after declining more than 9% this week. Bitcoin US spot ETFs recorded the highest single-day outflow on Thursday since their launch in January.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction
Solana (SOL) price trades in red below $194 on Friday after declining more than 13% this week. The recent downturn has led to $38 million in total liquidations, with over $33 million coming from long positions.
SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs
The SEC approved Hashdex's proposal for a crypto index ETF. The ETF currently features Bitcoin and Ethereum, with possible additions in the future. The agency also approved Franklin Templeton's amendment to its Cboe BZX for a crypto index ETF.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin (BTC) price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot Exchange Traded Funds (ETFs) in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.