FTX Lost Up to $2B in User Funds, $10B Sent to Alameda: Report

As the FTX saga drags into its second week, details of alleged mismanagement are starting to flood in — with more than a billion dollars in customer funds reportedly going missing even before the recent hack.

During a meeting held with several FTX executives in the Bahamas capital Nassau on Nov. 7, Reuters reported then-CEO Sam Bankman-Fried pulled up spreadsheets showing FTX had over time moved roughly $10 billion in client funds to sister firm Alameda Research.

Between $1 billion and $2 billion of those funds were unaccounted for among Alameda’s remaining assets — meaning they had effectively vanished, according to the report which cited sources familiar with the matter.

Bankman-Fried is said to have built a “backdoor” into FTX’s accounting system which allowed the disgraced founder to change FTX’s financial records without alerting external parties, including auditors.

The former CEO has denied he ever solicited or installed such a method, and responded to Reuters request for comment on the missing user funds with “???”.

An FTX spokesperson did not immediately return a request for comment.

Word of the missing funds came Saturday, just one day after the exchange filed for chapter 11 bankruptcy in a Delaware federal court. FTX was unable to source a capital injection needed to buck a liquidity crisis following a $6 billion bank run.

Also on Saturday, hackers allegedly stole $477 million in various cryptocurrencies from FTX wallets. Staff appear to have moved $186 million in digital assets to secure storage, while the attackers quickly cashed out $220 million in stolen tokens for DAI and ether via decentralized exchanges, per Elliptic.

Rival Binance had initially offered to bail out FTX but walked away after conducting its own due diligence, which found the exchange was billions of dollars in debt.

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