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Bankman-Fried received a $1 billion personal loan from his company

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Sam Bankman-Fried, the founder of the FTX exchange and Alameda Research, a cryptocurrency trading platform, seemed to confuse his bank and his companies.

According to John Ray, the new CEO in charge of restructuring his empire which went bankrupt on November 11, Bankman-Fried received a $1 billion personal loan from Alameda.

He is not alone: ​​the firm, which is a kind of cryptocurrency hedge fundalso lent $543 million in a personal loan to Bankman-Friend associate Nishad Singh and $55 million to Ryan Salame, co-CEO of FTX Digital Markets, one of FTX’s subsidiaries.

Those loans are listed in the Alameda white sheet given by Bankman-Fried teams to Ray when the latter took over as CEO on Nov. 11. This restructuring veteran is supposed to be handling the liquidation of FTX and its subsidiaries which exploded overnight out of cash. .

In a 30-page document filed with the United States Bankruptcy Court for the District of Delaware. the new CEO painted an unprecedented situation of the old merchant empire. According to Ray, the Bankman-Fried empire is in chaos: no controls, no board meetings, non-existent records in some cases, employees using company funds to buy houses in their name, management communicating via auto delete messaging app, software to hide misuse of customers money, etc. It’s a list of everything not to do in a business.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial reporting as has happened here,” Ray wrote. “From the compromised integrity of systems and faulty regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented. “

‘Unacceptable’

The new CEO also claimed that there is software at FTX that allows management to hide the misuse of customers’ money.

“Unacceptable management practices included using an insecure group email account as the root user to access confidential private keys and highly sensitive data for FTX Group companies around the world” , the seasoned restructuring veteran said in a 30-page document filed with the United States Bankruptcy Court for the District of Delaware.

He went on to say that there was “the use of software to conceal the misuse of client funds”.

Ray did not provide further details. But his statement thus undermines Backman-Fried’s denials that there was a backdoor allowing him to alter the records without third parties, including auditors and investors, noticing.

Reuters reported last week that financial data from FTX showed there was a “backdoor” on the books, created with “bespoke software”. It was described as a way for Bankman-Fried to cook the books without raising an alert.