FTX’s Digital Wallets Had Only $5 Billion in Crypto, Expert Witness Testifies
In the ongoing criminal trial of Sam Bankman-Fried, an expert witness testified that FTX’s digital wallets contained approximately $5 billion in cryptocurrency during the peak of the market in November 2021. This is significantly lower than the $20 billion that customers believed they owned. Notre Dame Alumni Professor of Accountancy Peter Easton conducted a thorough analysis of FTX’s wallets, using data from bank statements, the blockchain, and a large FTX database.
An Analysis Based on Blockchain Data
According to Professor Easton, his assessment was based on “much finer data” recorded on the blockchain, which made it more robust compared to tracking fiat deposits from FTX customers. He presented several charts to the jury, including one that compared customer balances in FTX’s database with the balances in their on-chain wallets.
A Discrepancy in Funds
Professor Easton found that FTX’s digital wallets consistently had billions of dollars less than what was stated in customer accounts from January 2021 to October 2022. Even when FTX’s total account balances appeared to be $11.4 billion, the actual value of crypto in their wallets was only slightly over $1 billion.
Possible Misuse of Customer Funds
Based on his analysis, Professor Easton concluded that Alameda Research, associated with Bankman-Fried, may have spent customer funds. In May 2022, Alameda’s accounts had negative balances totaling $12.6 billion on FTX. The expert witness emphasized his decades of experience in analyzing financial statements and mentioned his involvement in untangling Enron’s finances after its collapse.
The Trial and Defense Strategy
Sam Bankman-Fried is facing seven charges related to fraud and conspiracy in the collapse of FTX. The defense attempted to exclude Professor Easton’s testimony, but the judge ruled that his analysis was based on specialized knowledge and reliable methodology. Bankman-Fried has pleaded not guilty to all charges.
Hot Take: FTX’s Digital Wallets Had a Fraction of the Expected Funds
The ongoing trial of Sam Bankman-Fried has revealed that FTX’s digital wallets contained significantly less cryptocurrency than customers believed. Expert witness Professor Peter Easton found that during the peak of the market in November 2021, FTX’s wallets had only around $5 billion, compared to the expected $20 billion. This analysis was based on detailed blockchain data, which provided a more accurate assessment than tracking fiat deposits. The trial also raised concerns about possible misuse of customer funds by Alameda Research, associated with Bankman-Fried. As the trial continues, more details may emerge about the alleged fraud and conspiracy surrounding FTX’s collapse.
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