Topline
Sam Bankman-Fried and other executives at the now-bankrupt cryptocurrency exchange FTX and defunct sister hedge fund Alameda Research casually joked about misplacing millions of dollars’ worth of digital assets, management overseeing FTX’s bankruptcy proceedings alleged in a Sunday court filing, as Bankman-Fried prepares to face federal fraud charges.
Sam Bankman-Fried leaves a Manhattan federal courthouse on March 30.
Key Facts
In an internal message, Bankman-Fried purportedly said Alameda is “unauditable” [sic], and the investment firm’s brass was simply able to “ballpark” the finances for the hedge fund which once had nearly $40 billion in assets under management, according to a 43-page interim report by FTX’s new CEO John J. Ray III filed in bankruptcy court.
Alameda and FTX executives “sometimes find” $50 million worth of assets “lying around that we lost track of,” Bankman-Fried allegedly wrote.
Bankman-Fried faces 13 federal criminal charges, including for fraud at Alameda (Bankman-Fried pleaded not guilty to his charges, while Alameda CEO Caroline Ellison and FTC cofounder Gary Wang pleaded guilty in December for related charges).
FTX let thousands of uncashed deposit checks sit around offices like “junk mail,” approved millions of dollars in expense reports via Emoji on Slack and did not have a comprehensive list of who worked at the exchange when it went under in November, according to the report.
A 2022 internal document suggested Alameda should fudge its numbers for its crypto assets, allegedly saying they should “come up with some numbers? idk.”
A representative for Bankman-Fried declined to comment on the new allegations.
Crucial Quote
“Such is life,” Bankman-Fried purportedly said about losing track of tens of millions of dollars in Alameda assets. Alameda was “hilariously beyond any threshold of any auditor being able to even get partially through an audit,” the 31-year-old head honcho added, according to Ray.
Key Background
Once worth roughly $25 billion, Bankman-Fried’s wealth and reputation crumbled last fall as allegations of malpractice at FTX and Alameda mounted. Authorities arrested Bankman-Fried last December in the Bahamas, home to FTX’s headquarters, and he was extradited to the U.S. that month. Bankman-Fried illegally used money deposited by FTX customers to fund trading at Alameda, political donations and other activities, according to U.S. prosecutors. Shortly after arriving at FTX following its bankruptcy last year, Ray said in a court filing that the crypto exchange had a “complete absence of trustworthy financial information,” adding, “Never in my career have I seen such a complete failure of corporate controls.” (And he ought to know: Earlier in his career, Ray led Enron after its collapse.)
Further Reading
Bitcoin, Crypto Billionaires Lost $110 Billion In Past Year (Forbes)
No More Smartphone Or League Of Legends For Sam Bankman-Fried (Forbes)
Sam Bankman-Fried Pleads Not Guilty To New Bribery Charge—In An Untucked Dress Shirt (Photos) (Forbes)
U.S. Accuses Sam Bankman-Fried Of Paying $40 Million Bribe To Chinese Official (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2023/04/10/idk-bankman-fried-and-cronies-allegedly-joked-about-losing-track-of-tens-of-millions-of-dollars/