The FTX restructuring team’s second report, released on Monday, June 26, paints a damning picture of Sam Bankman-Fried’s involvement in the fraud at FTX and related hedge fund Alameda Research. According to the report, FTX executives were aware as early as August 2022 that the exchange was missing more than $8 billion in customer funds. This recasts many statements made by executives like Caroline Ellison, and especially by FTX CEO and co-founder Sam Bankman-Fried himself, in the following weeks and months.
The report also claims that Bankman-Fried got very hands-on in furtherance of the overall fraud. For example, $20 million of FTX customer funds went to Guarding Against Pandemics (GAP), a quote-unquote nonprofit run by Gabe Bankman-Fried, Sam’s brother. Additionally, the FTX Foundation, another quote-unquote nonprofit entity funded with customer money, donated $400,000 to an unnamed Effective Altruism organization.
The report also describes the investment of $450 million worth of FTX customer funds into an entity called Modulo Capital, founded by two known Bankman-Fried associates. Furthermore, the report claims that massive personal loans that went to FTX executives, many meant to fund political donations, were loans in name only.
The report also claims that a Payment Agent Agreement was fraudulently backdated to an effective date of June 1, 2019, and that Bankman-Fried signed the document with his own, actual hand. This is incredibly bad for Bankman-Fried, as it indicates a clear strategy to avoid generating DocuSign metadata that might reveal the document was not signed in 2019.
Overall, the report paints a damning picture of Sam Bankman-Fried’s involvement in the fraud at FTX and Alameda Research.