According to the FTX Debtors’ second interim report, it is extremely difficult to trace funds, and there is no question that this was done on purpose.
CEO John Ray stated in the FTX Debtors’ second interim report, which was published on June 26, that FTX has so far recovered around $7 billion in liquid assets and is still looking for more. But their attempts are complicated by the widespread commingling of monies.
The $8.7 billion total plundered value of client assets is what the FTX Debtors, which are made up of FTX and its affiliates, now estimate. About $6.4 billion of that total, or the majority of the amount, was in fiat and stablecoins, which FTX did not distinguish in its accounting.
The study said that the former FTX leadership “did not mix and misuse customer deposits by accident” and covered its conduct “with the assistance of a senior FTX Group attorney” and others. So as a result:
Despite extensive work by experts in forensic accounting, asset tracing and recovery, and blockchain analytics, it is extremely difficult to trace substantial assets of the Debtors to any particular source of funding, or to distinguish between the FTX Group’s operating funds and deposits made by its customers.
Flows of FTX customer money out of primary deposit accounts “as identified to date” were depicted in a diagram, which highlighted the scale of the confusion. According to the research, the transfers were made feasible by banks being told incorrect information about their intentions, among other fraudulent statements.
Former CEO Sam Bankman-Fried (SBF) even lied to Congress. The mysterious FTX senior attorney fired a junior attorney who objected to the company’s misleading practices, which was repeatedly stated. The investigation said misappropriated monies were used for political and philanthropic donations, company investments, and luxury real estate purchases.
The substantial commingling and misuse of FTX.com client deposits led to an unreported, fiat currency liability to consumers, according to the investigation. “The FTX Senior Executives [SBF, Gary Wang, and Nishad Singh] and [Alameda Research CEO Caroline] Ellison informally tracked the size of FTX.com’s undisclosed, fiat currency liability to customers,” the report said. They provided estimates between $8.9 billion and $10 billion, which is slightly higher than the figure provided by the FTX Debtors.