A Nov. 3 Reuters report elaborated on this claim, citing three people familiar with FTX operations. The sources said Bankman-Fried moved at least at least $4 billion in FTX funds secured by assets in aid of Alameda Research. While two sources disclosed that a portion of the money were customer deposits, the precise value of the assets could not be established.
One of the losses incurred by Alameda Research was a $500 million loan agreement with crypto lender Voyager Digital – which later filed for bankruptcy protection. Aside from cash, the crypto exchange's FTT token and its shares in the trading platform Robinhood Markets Inc. were used to support the beleaguered trading company. Reuters also mentioned that Bankman-Fried, who has since stepped down as FTX's CEO, did not talk to others about the fund transfer.
A separate report by the Wall Street Journal (WSJ) revealed that FTX loaned more than half of its $16 billion in customer funds to Alameda overall. Bankman-Fried himself told an investor that Alameda Research owes FTX nearly $10 billion. The WSJ also mentioned that the beleaguered trading company had to withdraw additional loans from other financial companies as well, amounting to $1.5 billion as per sources familiar with the issue.
CoinDesk first reported that Alameda Research held a huge amount of non-cash FTT on its balance sheet, inciting speculation that the trading firm lacked adequate liquidity.
FTX stopped all non-fiat customer withdrawals on Nov. 1, after collecting $6 billion in withdrawal requests over 72 hours early last week. Users rushed to pull out $6 billion crypto tokens, with daily withdrawals totaling tens of millions of dollars. This forced the platform to pause customer withdrawals after speculations around a possible liquidity crunch began to wear down customer confidence in the platform.
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission began probing FTX over alleged mismanagement of customer funds. The Department of Justice (DOJ) has also reportedly been involved in the matter.
The reports only serve to multiply the turmoil surrounding Bankman-Fried's crypto company, which only worsened after rival Binance backed out of its plan to purchase FTX.
FTX originally agreed on Nov. 1 to be acquired by Binance, mentioning a liquidity crunch. Binance CEO Changpeng Zhao signed a non-binding letter of intent to buy FTX to alleviate liquidity pressure. The next day, however, Zhao's company pulled out of the deal after doing due diligence on FTX's finances.
Binance said on Nov. 2 that it decided to pull out of the deal. It accused FTX of mismanaging users' assets, also dropping hints of alleged regulatory probes.
"Our hope was to be able to support FTX's customers to provide liquidity, but the issues are beyond our control or ability to help," Binance stated. (Related: Binance backs out of bailout plan to rescue FTX, causing further turmoil across crypto markets.)
After the supposed deal with Binance went out the window, Bankman-Fried took to Twitter and wrote a broad mea culpa regarding FTX. He added that Alameda is "winding down" its trading and "one way or another, soon they won't be trading on FTX anymore."
Watch the video below that explains the FTX collapse in 99 seconds.
This video is from the Planet Zedta channel on Brighteon.com.