The second report on the collapse of cryptocurrency exchange FTX reveals disturbing details about the misuse of customer deposits and the knowledge of massive losses by its former management team. The report, spanning 33 pages, aims to recover assets and maximize stakeholder recoveries. It states that FTX’s top executives, including Caroline Ellison, knew about an $8.9 billion shortfall in customer assets as early as August 2022, months before filing for bankruptcy in November. In response, they created a fake customer account referred to as “our Korean friend’s account” to hide the liability. The report highlights the commingling of customer deposits and corporate funds from the inception of FTX.com. The bankruptcy proceedings in Delaware have recovered approximately $7 billion in liquid assets, with more expected. FTX’s former CEO, Sam Bankman-Fried, faces charges related to the exchange’s collapse, while Ellison and FTX co-founder Gary Wang have pleaded guilty and are cooperating with prosecutors.
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