FTX and Alameda Executives Including Sam Bankman-Fried Were Aware of Customer Funds Misuse: Report

A new report claims executives of FTX and Alameda Research were aware that their customers’ funds were being mishandled.

According to the Wall Street Journal, anonymous sources familiar with the matter say that top executives at FTX knew the company had lent out billions of dollars worth of customer deposits to Alameda Research, its quantitative trading branch.

The sources say that Alameda CEO Caroline Ellison met with employees this week via a video call and disclosed that she, FTX founder and former CEO Sam Bankman-Fried, and two other FTX executives knew that the crypto exchange was loaning out customer funds to Alameda.

The other two executives were Nishad Singh, FTX’s director of engineering, and Gary Wang, FTX’s chief technology officer and co-founder.

During the call, Ellison said that FTX was loaning out the money to Alameda to help the trading firm meet its outstanding liabilities, according to the sources. They also noted that Alameda had previously taken out loans for illiquid venture investments, according to the report.

Previously, it was alleged that Bankman-Fried misused customer funds by lending out $10 billion worth of user deposits to Alameda, a move which the former billionaire referred to as “a poor judgment call.” At the time, it was reported that FTX had about $16 billion in its coffers.

FTX, Alameda, FTX.US, and other FTX affiliates filed for bankruptcy last week after Bankman-Fried failed to cut a deal with Binance CEO Changpeng Zhao to buy out the embattled crypto exchange.

Featured Image: Shutterstock/Mia Stendal