|

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. 

Author

Ekta Mourya

Ekta Mourya

FXStreet

Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.

More from Ekta Mourya
Share:

Editor's Picks

Cardano Price Forecast: ADA risks steeper decline amid easing retail demand 

Cardano is trading in the red on Thursday, with roughly 10% losses so far this week, suggesting capitulation after last week’s 30% rally. Waning retail demand in ADA futures amid declining Open Interest and funding rates suggests capitulation speculation. The technical outlook for ADA is bearish, with bears targeting the 50-day Exponential Moving Average at $0.1899.

Top Altcoins Price Forecast: Ripple eases to $1.40, Solana hits $100, DOGE capped below $0.10

Ripple and Dogecoin are facing downside pressure after double-digit gains last week, while Solana extends its rally to $100. The technical outlook for XRP, SOL, and DOGE points to potential upside as the broader market sustains a risk-on sentiment.

Ethereum Price Forecast: Derivatives demand cools after short squeeze-led rally

After Ethereum gained over 30% last week, bulls have begun dominating its net taker volume. The 30-day moving average of the metric flipped positive last week, indicating immediate market activity in perpetual futures leans toward the upside.

Crypto Overview: Bitcoin holds at $78,000 amid US PCE surprise – SPX6900, VeChain rally

The broader cryptocurrency market maintains a constructive tone, with Bitcoin sustaining gains above $78,000 on Thursday. The US July Personal Consumption Expenditures (PCE) Price Index inflation came in higher than expected on Wednesday, suggesting that inflation remains elevated. SPX6900 and VeChain recorded double-digit gains over the last 24 hours, emerging as top performers.

Bitcoin: The US Treasury saves BTC

Bitcoin extends gains, trading above $77,000 on Friday after rallying over 20% and reaching its highest level since mid-May. Crypto markets continue to cheer the US Treasury’s decision to double its debt buyback operations, posting their 7th-largest liquidation event in history.