Alameda Research
FTX sues Sam Bankman-Fried and other former execs to claw back $1B
Published
12 months agoon
By
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FTX has sued former CEO Sam Bankman-Fried and other former key executives from the now-bankrupt crypto exchange to recover more than $1 billion in allegedly misappropriated funds.
A July 20 complaint filed in a United States Bankruptcy Court named former Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, former FTX engineering director Nishad Singh and Bankman-Fried as defendants.
In the lawsuit, FTX claimed the former executives breached their fiduciary duties by allegedly misappropriating customer funds on a “continuous basis to finance luxury condominiums, political and ‘charitable’ contributions, speculative investments and other pet projects.”
Additionally, the lawsuit alleged they “abused their control” over FTX and its related companies to commit “one of the largest financial frauds in history.”
The suit claimed the defendants created an environment in which a handful of employees had “virtually limitless power” to oversee transfers of fiat and crypto assets, as well as granting themselves the power to hire and fire employees with “no effective oversight” on how they exercised these powers.
Additionally, FTX alleged the former executives issued more than $725 million worth of equity to themselves, “without [debtors] receiving any value in exchange.”
FTX claimed Bankman-Fried and Wang also misappropriated an additional $546 million to purchase shares in the trading platform Robinhood.
The filing alleged Ellison paid herself $28.8 million in bonuses and used $10 million of the funds to purchase a stake in an artificial intelligence company.
FTX also alleged that on Jan. 24, 2022, Bankman-Fried transferred $10 million as a “gift” from his FTX US account to his father’s account on the same exchange.
Related: Terraform Labs seeks access to FTX wallets in fraud defense
Shortly afterward, Bankman-Fried’s father made six transfers totalling $6.75 million to his personal accounts at Morgan Stanley and TD Ameritrade, the filing asserts. FTX claimed this “gift” is being used to fund Bankman-Fried’s legal defense.
FTX said many of the alleged fraudulent transfers occurred while the exchange was insolvent, something it said the defendants were acutely aware of. While FTX initially prohibited accounts carrying a negative balance, Bankman-Fried allegedly directed his associates to modify the exchange’s code.
“In or around July 2019, Bankman-Fried directed one or more of his co-conspirators or individuals working at their behest to modify the software to permit Alameda to maintain a negative balance in its account on the exchange.”
Due to this alteration, FTX was capable of maintaining standard operations while running “very large deficits.” By March 2022, Ellison “privately estimated that the FTX exchange had a cash deficit alone of more than $10 billion,” the filing added.
The crypto exchange and its subsidiaries are now headed by restructuring chief and CEO John Ray after it filed for Chapter 11 bankruptcy on Nov. 11, 2022.
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Alameda Research
Alameda-Backed Mining Firm Genesis Digital Assets Considering IPO in US: Report
Published
5 days agoon
July 3, 2024By
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A Bitcoin (BTC) mining firm backed by disgraced FTX founder Sam Bankman-Fried is reportedly considering an initial public offering (IPO) in the US.
According to a new report by Bloomberg, anonymous sources familiar with the matter say that Genesis Digital Assets, which is backed by Alameda Research, is currently working with advisors on the potential listing.
Alameda Research was once the investing branch of the former crypto exchange FTX.
One of the sources divulged that the firm is planning on launching a pre-IPO funding round in the coming weeks.
Genesis Digital Assets, which has its roots in 2014, eventually started large-scale operations in China before the nation banned the entire industry in 2021. Then, the company raised $550 million and moved to the US, according to the report.
Between 2021 and 2022, Alameda Research invested over $1 billion into Genesis Digital Assets, before the FTX empire collapsed and Bankman-Fried was accused and subsequently found guilty of defrauding investors and mishandling billions of dollars worth of customer funds.
In April 2022, Genesis Digital Assets was valued at $5.5 billion, according to an internal company memo seen by Bloomberg News. However, when FTX collapsed in November 2022, the digital assets industry saw sharp price decreases across the board.
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Alameda Research
Sam Bankman-Fried Found Guilty of Committing Billion-Dollar Fraud at FTX and Alameda Research
Published
8 months agoon
November 3, 2023By
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Sam Bankman-Fried has been found guilty of spearheading a billion-dollar fraud against customers and investors at the crypto exchange FTX and trading firm Alameda Research.
A jury has found Bankman-Fried guilty on all seven charges against him, including wire fraud and conspiracy to commit wire fraud against FTX’s customers, wire fraud and conspiracy to commit wire fraud against Alameda’s lenders, conspiracy to commit securities fraud against FTX’s investors, conspiracy to commit commodities fraud against FTX’s customers and conspiracy to commit money laundering.
The jury took just four hours to reach a verdict.
Bankman-Fried was arrested in December after the epic collapse of his former crypto empire.
Prosecutors accused him of stealing billions of dollars in FTX customer deposits to purchase investments, loan repayments, political donations and real estate.
Former FTX chief technology officer Gary Wang, former head of engineering Nishad Singh and former Alameda CEO Caroline Ellison testified against Bankman-Fried at the trial, saying they had carried out his orders.
Bankman-Fried testified that he did not knowingly defraud anyone, although he admitted there were “significant oversights” at his companies.
“A lot of people got hurt – customers, employees. And the company ended up in bankruptcy. I made a number of small mistakes and a number of larger mistakes.”
Sentencing is expected to take place early next year.
Bankman-Fried faces a total possible sentence of 115 years in prison.
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Alameda Research
Insights Into Alameda’s Financial Stability In FTX Trial
Published
9 months agoon
October 14, 2023By
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The trial against FTX co-founder Sam Bankman-Fried took an intriguing turn as Zac Prince, the CEO of defunct crypto lender BlockFi, provided testimony in a Manhattan federal courtroom.
Prince’s appearance provided valuable insights into the intricate relationship between BlockFi, FTX, and Alameda Research.
BlockFi’s Bankruptcy Rooted In Alameda And FTX
According to a Bloomberg report, Prince revealed that BlockFi had substantial exposure to Alameda and FTX, estimated at around $1 billion, at the time of BlockFi’s failure in November 2022.
Prince asserted that if the loans to Alameda were still in good standing and the funds on FTX were available, BlockFi would not have filed for bankruptcy. This statement suggests that BlockFi’s financial troubles were closely tied to the collapse of Alameda and FTX.
Prince’s testimony diverged significantly from Caroline Ellison, the government’s star witness, who portrayed Bankman-Fried as the mastermind behind a fraudulent scheme using FTX customer funds for speculative trading at Alameda.
Prince’s account positioned BlockFi as a victim of Bankman-Fried’s alleged schemes, claiming that BlockFi made loans to Alameda based on misleading balance sheets.
Defense lawyers sought to emphasize that BlockFi willingly provided the loans to Alameda, with knowledge of the associated risks.
Creditors Accuse BlockFi Of Inadequate Due Diligence
Prince discussed BlockFi’s due diligence process regarding Alameda’s collateral, comprised of tokens affiliated with FTX. The judge requested plainer terms during Prince’s explanation, prompting an analogy using car loans.
Per the report, the prosecution questioned the adequacy of BlockFi’s due diligence, as creditors accused the company of failing to recognize warning signs before offering substantial loans to Alameda.
Prince’s testimony highlighted that providing “unaudited balance sheets” is an industry norm for borrowers seeking loans. The defense sought to establish that BlockFi knew the risks of lending to Alameda and acted within industry norms.
Zac Prince’s testimony in the trial against Sam Bankman-Fried provided a deeper understanding of the intertwined relationships within the crypto industry. BlockFi’s exposure to Alameda and FTX and its subsequent bankruptcy offered insights into the potential repercussions of alleged fraudulent activities.
The differing narratives presented by the prosecution and defense underscore the complexities of the case. As the trial unfolds, the court will continue to examine the details surrounding BlockFi’s lending practices and the extent of Bankman-Fried’s involvement in the alleged schemes.
It is important to note that BlockFi can no longer be utilized for crypto-related activities, as the company declared bankruptcy and suspended withdrawals in November 2022. The bankruptcy filing indicates that BlockFi owes between $1 billion and $10 billion to over 100,000 creditors.
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