FTX Collapse Reveals Up to $2 Billion in Missing Customer Funds
Between $1 billion and $2 billion in customer funds vanish as Sam Bankman-Fried's crypto exchange plunges into bankruptcy. Federal regulators actively investigate the massive transfer of assets to Bankman-Fried's affiliated hedge fund.
Between $1 billion and $2 billion of customer funds vanish from FTX as the crypto exchange enters bankruptcy protection. Former CEO Sam Bankman-Fried transfers $10 billion from the exchange to his affiliated trading firm, Alameda Research, but the majority of those funds disappear. Senior FTX officials disclose this massive financial gap to Reuters, leaving the future of customer accounts in serious jeopardy.
Multiple federal regulators, including the Department of Justice and the Securities and Exchange Commission, actively investigate the close ties between FTX and Alameda Research. Bankman-Fried denies secretly transferring the money, blaming confusing internal labeling for the discrepancies. When asked directly about the missing billions via text message, the former CEO responds only with question marks.
The financial crisis erupts after Binance CEO Changpeng Zhao announces his company is selling its holdings of FTT, the native token of FTX. This public declaration triggers a massive customer panic, prompting roughly $5 billion in withdrawal requests in a single day. Bankman-Fried responds by holding an emergency meeting in the Bahamas with top executives to assess the exact size of the financial hole.