Where has $1 billion of FTX clients’ money disappeared?

Former employees of the platform, who wished to remain anonymous, shared with Reuters up-to-date information on the state of the bankrupt platform. So, just a week ago, a meeting of the company’s top management was held, which was also attended by several top managers from the exchange. During the meeting, Sam Bankman-Fried presented the financial statements and set the task of determining the amount of external funding required to keep FTX operating in a cash-strapped environment.

It turned out that he had transferred $ 10 billion of user assets from FTX to Alameda Research, which by that time already had certain financial problems. Up to this point, Bankman-Fried had not informed FTX's top management of either Alameda Research losses or the funds transfer, the sources said.

Spreadsheets provided by SBF contained information on the assets movement between companies and Alameda's expense items. But at the same time, from $ 1 to 2 billion “hung in the air”: they are not on Alameda's balance sheet, and there is no information about their whereabouts.

According to sources, the mysterious disappearance of the funds is the result of a back door in the FTX accounting department. This is the only explanation for how money could freely pass through a system that uses specialized software and raises “red flags” at the slightest violation.

Bankman-Fried himself denies the existence of a backdoor, and commented on the transfer of client assets as follows:

“We had confusing internal labeling and misread it.”

The bankruptcy of FTX has become the loudest topic that stirred up the crypto industry this week. While the SEC, the US Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC) are investigating the activities of the exchange, key crypto market players are trying to disown financial ties with FTX and Alameda Research.