According to a report released by FTX on Monday, certain banks that collaborated with Alameda Research, the trading firm founded by Sam Bankman-Fried, raised concerns about the firm’s wire activity as early as 2020. The report revealed that some banks started rejecting wires to or from Alameda when the cryptocurrency exchange was struggling to access the US banking system.
Federal prosecutors have accused Bankman-Fried of embezzling billions of dollars from customer funds to cover losses at Alameda. Following Bankman-Fried’s resignation as CEO, FTX filed for bankruptcy in November, estimating that approximately $8.7 billion in customer assets were misappropriated from the exchange.
Bankman-Fried has pleaded not guilty to 13 counts of fraud and conspiracy. He previously stated that when FTX lacked a bank account, customers would wire money to Alameda, which was then credited on FTX. Bankman-Fried has not responded to the report at this time.
In 2020, certain banks working with Alameda questioned the firm about its wire transfers, as per the report. A bank representative reached out to Alameda regarding references to FTX in the company’s wire activity and inquired whether the account was being used to settle trades on FTX. An Alameda employee responded, falsely claiming that all wires through the account were solely for settling trades with Alameda, despite occasional confusion between FTX and Alameda by customers, according to the report.
On Monday, FTX clarified that the Alameda employee’s response was incorrect. In 2020 alone, one of Alameda’s accounts received over $250 billion in deposits from FTX customers and more than $4 billion from other Alameda accounts, which were funded partly by customer deposits.
Bankman-Fried, a 31-year-old former billionaire, amassed an estimated net worth of $26 billion through the digital asset boom. He also became a notable political and philanthropic donor before FTX’s bankruptcy.
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