Controversial FTX tycoon Sam Bankman-Fried siphoned off billions of dollars from the cryptocurrency company to spend on expensive real estate, personal expenses for himself and others, and countless political donations, federal filings show.
“This is taking money from customers,” FTX’s new CEO, John Ray, told Congress during a scathing review of the company he acquired from Bankman-Fried. â€œand using it for our own purposes.â€
Bankman-Fried was arrested in the Bahamas on Monday and faces federal charges in the US, just weeks after FTX filed for bankruptcy.
According to the SEC complaint, FTX’s funds included more than $8 billion in 2017 directed to subsidiary trading firm Alameda Research, which Bankman-Fried founded and worked with Carolyn Ellison. Between $1 billion and $2 billion of these funds were lost, This was reported by Reuters.
Funds transferred from FTX to the Alameda hedge fund were used not only for Alameda’s private sales, but also to finance loans to Bankman-Fried and other FTX executives, the SEC filing said.
Bankman-Fried, 30, lent himself $1.338 billion in personal loans, according to SEC filings.
“Between March 2020 and September 2022, Bankman-Fried executed promissory notes on Alameda loans totaling more than $1.338 billion,” the SEC said. â€œIncluding two cases where Bankman-Fried was a borrower in his personal capacity and a lender in his capacity as CEO of Alameda.â€
Another $300 million of the FTX that came with Alameda was spent on luxury real estate in the Bahamas, according to a bankruptcy filing by the company’s lawyers. According to the SEC, the real estate purchases went to him, his parents and other FTX executives.
The SEC alleged that the loans to Bankman-Fried and others were “poorly documented and sometimes not documented at all.” Property acquisition and ownership records were also “poorly organized and documented.”
“Neither the fact of the loans and acquisitions, nor the incorrect documentation of the company’s significant liabilities and expenses were disclosed to investors,” the SEC said.
Bankman-Fried and other company executives even had money left over for politics. Political donations linked to Bankman-Fried and other FTX executives have spent about $73 million on political candidates and causes, according to Bloomberg data.
Recovering campaign funds through bankruptcy proceedings can be a layered and drawn-out process. to a Bloomberg report It depends on many federal and state laws.
Bankman-Fried was the second largest individual donor to Democrats behind billionaire businessman George Soros.