A new report claims that troubled crypto exchange platform FTX lent billions of dollars worth of its customers’ assets to fund its quantitative trading branch.
According to The Wall Street Journal, FTX CEO and founder Sam Bankman-Fried told investors that Alameda Research owes FTX about $10 billion worth of customer funds.
The source says that Bankman-Fried gave out loans to Alameda Research using $10 billion out of the $16 billion in customer deposits FTX had, a move the CEO described as a “poor judgment call.”
Bankman-Fried, who was also the CEO of Alameda Research until last year, apologized earlier today to his 930,000 Twitter followers in a lengthy thread, vowing that if FTX were to survive and continue, it would be incredibly transparent.
He also noted that Alameda, known for its aggressive investing tactics using leveraged funds, would wind down its trading activity.
“In any scenario in which FTX continues operating, its first priority will be radical transparency – transparency it probably always should have been giving. Giving as close to on-chain transparency as it can: so that people know exactly what is happening on it.”
Earlier this week, FTX faced a liquidity crisis and collapsed, prompting Bankman-Fried to reach out to Binance CEO Changpeng Zhao for a bailout.
While Zhao initially agreed to help, Binance eventually backed out citing the US government’s ongoing investigations into FTX.
As stated by Zhao,
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.
In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
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Featured Image: Shutterstock/Tithi Luadthong
Source: https://dailyhodl.com/2022/11/10/embattled-crypto-exchange-ftx-lent-billions-in-customer-assets-to-fund-alameda-research-report/