In the ongoing trial of Sam Bankman-Fried (SBF), a forensic accountant was tasked with unraveling the mystery surrounding the vanishing $9 billion from FTX's customer funds. When questioned about whether FTX had misused these funds, the accountant unequivocally confirmed, "Oh, yes."
Peter Easton, an accounting professor from the University of Notre Dame, was enlisted by the prosecution to shed light on the situation. Easton's investigation revealed that user deposits had been redirected into various ventures, including businesses and real estate, political contributions, and charitable donations.
Crucially, Easton pinpointed specific transactions involving SBF that necessitated the use of customer funds. Notably, in a significant interview with ABC's George Stephanopoulos in November 2022, the FTX founder denied any knowledge of improper customer fund utilization.
FTX's customer funds reached their peak in June 2022, when they were supposed to be securely held at Alameda Research. However, it was discovered that the bank accounts held only $2.3 billion out of the expected $11.3 billion. Easton's findings suggested that the backing for customer funds had been eroding as early as March 2021.
Easton revealed that customer funds were invested in entities such as Anthony Scaramucci's SkyBridge Capital and Lily Zhang's Modulo Capital. Modulo Capital returned $404 million to FTX in March 2023, asserting that the funds had been incorrectly transferred. Notably, FTX's customers unknowingly financed a $550 million investment in Genesis Digital Assets, a cryptocurrency mining company, which is distinct from another Genesis that was making headlines in the crypto world on the same day.
A former Alameda Research employee, Aditya Baradwaj, disclosed a comprehensive list of SBF's political donations that emerged during the trial, totaling $133 million. These donations included a $10 million gift to SBF's father, Joseph Bankman, substantial contributions to both Republican and Democratic super PACs, as well as donations to various charitable organizations.
During the trial, FTX's Head of Engineering, Nishad Singh, expressed feeling "betrayed" by SBF. Singh acknowledged his share of responsibility for the wrongdoing but strengthened the prosecution's claim that SBF was the mastermind behind FTX's fraudulent activities. Singh revealed that he had become aware of the fraud only two months before the public, yet he remained onboard in an attempt to salvage the deteriorating situation.
Singh articulated his concerns about FTX's financial state during his final months at the company. When he inquired about the extent of the company's financial shortfall, SBF diverted the question, stating that it was the "wrong question" and encouraged a focus on "how can we deliver?"
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