Alameda Research, an FTX-affiliated quantitative crypto trading platform co-founded by Sam Bankman-Fried in 2017, allegedly used funds belonging to FTX users to trade, sources say.
The crypto news is the latest installment in the shocking developments at FTX this past week. And as the fallout that followed revelations of FTX’s insolvency continues to unfold, CNBC has reported that Alameda knowingly and secretly used assets of FTX customers in risky trading ventures. The firm lost big.
Alameda used billions of dollars of FTX customer funds
FTX filed for bankruptcy last week, with Bankman-Fried resigning his post as CEO. The filing revealed 130 companies affiliated with the collapsed crypto exchange had also entered the voluntary bankruptcy proceedings. At the center of all that seems to be a massive hole in the fallen Crypto Empire’s balance sheet.
Bankman-Fried reportedly transferred $10 billion to Alameda.
According to the source cited by CNBC, investors, employees and even auditors did not have a clue of what was happening as Alameda, in the comfort of a penthouse in the Bahamas, blew billions of dollars via leverage and margin trading.
And Alameda used the native FTX token as collateral for loans from FTX – which essentially took customers’ money and pumped it into the struggling trading firm.
So last week’s events only accelerated what had long been coming. A run on the crypto exchange saw customers withdraw nearly $5 billion as FTX first halted withdrawals before filing for bankruptcy.