Renowned Accounting Professor Reveals Mishandling of Customer Funds in FTX Trial
A University of Notre Dame accounting professor named Peter Easton has made a shocking revelation during the trial of Sam Bankman-Fried. Easton conducted a thorough examination of the financial records of Alameda Research and FTX, revealing clear mishandling of customer funds.
Easton’s Audit Exposes Troubling Finances at FTX
Easton’s analysis uncovered instances where customer funds were being used for purposes other than their intended use. These funds were diverted to loan repayments, charitable donations, venture investments, and real estate acquisitions. The gravity of the situation became apparent when it was revealed that there was an $11.3 billion deficit between customer deposits and available funds by June 2022. Additionally, FTX had over $3 billion in unmet cryptocurrency liabilities from customer deposits.
FTX’s Use of Customer Funds for Acquisitions
The investigation also discovered that FTX used customer funds to acquire Modulo Capital and make investments in SkyBridge Capital and Genesis Digital Assets. Furthermore, FTX repurchased its stake held with competitor exchange Binance using customer funds.
Involvement of Alameda Research
Easton’s analysis delved into Alameda Research’s involvement and found that even if all available funds were used for spot margin trading on FTX, it would not have been enough to cover outstanding customer liabilities. It was also revealed that all accounts with the “allow negative” feature on FTX were owned exclusively by Alameda.
Eliora Katz, a former FTX lobbyist, also testified about the discrepancies between Bankman-Fried’s public assurances and the undisclosed realities that led to FTX’s collapse. Bankman-Fried emphasized transparency and risk monitoring, but prosecutors and insiders have cited inadequate financial record-keeping and the diversion of customer funds to Alameda Research.
Hot Take: FTX Faces Damaging Revelations in Trial
The trial of Sam Bankman-Fried has brought to light disturbing revelations about the mishandling of customer funds at FTX. Peter Easton’s meticulous analysis exposed a significant deficit between customer deposits and available funds, as well as the use of customer funds for various purposes beyond their intended use. The involvement of Alameda Research raises further questions about the relationship between the two entities. These revelations cast doubt on FTX’s transparency and risk-monitoring system, contradicting previous public assurances. The trial underscores the importance of financial record-keeping and maintaining the integrity of customer funds in the cryptocurrency industry.
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