Former FTX General Counsel Denies Approving Lending of Customer Funds to Alameda Research
Can Sun, former general counsel of FTX, testified in the trial of Sam Bankman-Fried, founder of FTX, and denied approving the lending of customer funds to sister company Alameda Research. Sun stated that he believed customer funds were segregated from those of FTX and its affiliates based on his conversations with Bankman-Fried. The prosecution presented FTX’s terms of service and public statements to support the separation of customer funds from the company.
FTX Used Customer Funds to Buy Back Binance’s Stake
The trial also revealed that FTX used customer funds to repurchase Binance’s stake in the company. Binance CEO Changpeng Zhao had previously disclosed that Binance received over $2.1 billion in BUSD stablecoins and FTT tokens as part of the repurchase agreement. This information came to light during Binance’s exit from FTX equity.
FTX Proposed Plan for Creditor Holdings
FTX has proposed a plan to return up to 90% of creditor holdings to those affected by its bankruptcy. The plan divides missing customer assets into three pools: FTX.com customers, FTX.US customers, and a “General Pool” for other assets. Customers with a preference settlement amount below $250,000 can accept the settlement without any reduction of claim or payment. However, factors such as taxes, government claims, and token price fluctuations may affect the final amount received by creditors.
Excluding Insiders and Affiliates
The debtors have stated that they may exclude insiders, affiliates, and customers from the settlement if they were aware of the mixing and misuse of customer deposits and corporate funds or if they changed their KYC information to facilitate withdrawals during the exchange’s troubled times.
Hot Take: FTX Faces Legal Challenges Amidst Allegations of Misuse of Customer Funds
FTX’s former general counsel, Can Sun, denied approving the lending of customer funds to sister company Alameda Research in the ongoing trial against founder Sam Bankman-Fried. The trial also revealed that FTX used customer funds to buy back Binance’s stake in the company. FTX has proposed a plan to return up to 90% of creditor holdings, but these payouts may be subject to various factors. The exclusion of insiders, affiliates, and customers from the settlement is also being considered. These legal challenges highlight the allegations surrounding FTX’s handling of customer funds and its impact on affected parties.
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