According to the second interim report from FTX Debtors, tracking down the embezzled funds from the collapsed exchange is a “huge challenge.”
According to the second report by “FTX Debtors”, published on June 26, $7 billion in embezzled assets have been recovered to date. The broad mix of funds, however, complicates efforts to search for additional assets, current FTX CEO John Ray said in the report.
Previously, FTX Debtors, indicated that the exchange owed clients approximately $8.7 billion when it filed for bankruptcy last year. It is important to note that the bulk of those assets, more than $6.4 billion, were in fiat and stablecoins that were embezzled, according to the report.
FTX Debtors Report Details
The report noted that former FTX leadership “did not misuse client deposits by accident.” In addition, it was also indicated that the former leadership of FTX, “concealed their actions” with the assistance of a senior lawyer for the company.
“Despite the extensive work done by experts in forensic accounting, tracing, and asset recovery on the Blockchain, it is extremely difficult to trace the substantial assets of debtors to any particular funding source, or to differentiate between FTX operating funds and deposits made. for their customers.” The report stated.
The extent of the FTX chaos was laid out in a diagram of FTX clients’ money flows out of the main deposit accounts “identified to date.”
According to FTX Debtors, those assets were made possible to misrepresent through “numerous fake companies.” The report also highlighted that the embezzled funds were used for political donations, charitable donations, and company acquisitions such as luxury real estate.
FTX Embezzled Funds Through Fake Crypto Companies
Furthermore, the report stated that FTX created a new entity called “North Dimension Inc.”, which was falsely described as a crypto company with 2,000 counterparties and an average monthly trading volume of $10 million.
However, it was actually a shell company that the exchange used to receive customer deposits and withdrawals for the Bahamas-based exchange.
According to the report, when a company lawyer discovered and raised concerns that North Dimension accounts were being used to fund withdrawals from the exchange, the company fired the lawyer, who was recently hired by the company, “without justification.” the crypto company
Such embezzlement was the main focus of the statements made by the former CEO of the collapsed FTX exchange, Sam Bankman-Fried, before the US Congress. In addition, the involvement of the unidentified lawyer who detected the embezzlement through the North Dimension accounts was also repeatedly mentioned.
“FTX senior executives Sam Bankman-Fried, Gary Wang, Nishad Singh and Caroline Ellison of Alameda Research informally calculated the amount of FTX.com’s unreported fiat currency debt to its clients, which was the result of the extensive mixing and misuse of customer deposits,” claims the report.
“Their estimates ranged from $8.9 to $10 billion, which is slightly higher than what was estimated by exchange debtors,” the report added.
Finally, FTX Debtors said that it will continue to report on the analyzes and findings as the work progresses, to “manage to recover” as much value as possible for creditors.
By Audy Castaneda
