Bahamas police interview FTX’s Bankman-Fried amid mystery outflows
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The inquiries add to the mounting legal pressure that Mr Bankman-Fried is facing since his FTX empire crumbled over the past week.
PHOTO: NYTIMES
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LONDON – A day after Mr Sam Bankman-Fried’s digital-asset empire filed for Chapter 11 protection,
Mr Bankman-Fried lives in the Bahamas.
The inquiries add to the mounting legal pressure that Mr Bankman-Fried is facing since his FTX empire crumbled over the past week.
FTX filed for bankruptcy on Friday, one of the highest profile crypto blowups, after traders rushed to withdraw US$6 billion (S$8.2 billion) from the platform in just 72 hours, and rival exchange Binance abandoned a proposed rescue deal.
FTX chief executive John J. Ray III said on Saturday that the company was working with law enforcement and regulators to mitigate the problem, and was making “every effort to secure all assets, wherever located”.
“Among other things, we are in the process of removing trading and withdrawal functionality,” he said.
The exchange’s dramatic fall from grace has seen its 30-year-old founder, Mr Bankman-Fried, known for his shorts and T-shirt attire, morph from being the poster child of crypto’s successes to the protagonist of the industry’s biggest crash.
The turmoil at FTX has seen at least US$1 billion of customer funds vanish from the platform, sources told Reuters on Friday.
Mr Bankman-Fried had transferred US$10 billion of customer funds to his trading company, Alameda Research, the sources said.
New problems emerged on Saturday when FTX’s US general counsel, Mr Ryne Miller, said in a Twitter post that the firm’s digital assets were being moved into so-called cold storage “to mitigate damage upon observing unauthorised transactions”.
Cold storage refers to crypto wallets that are not connected to the Internet to guard against hackers.
Blockchain analytics firm Nansen said it saw US$659 million in outflows from FTX International and FTX US in the last 24 hours.
A separate blockchain analytics firm Elliptic said around US$515 million worth of cryptoassets were “suspected to have been stolen”, while US$186 million were likely moved into secure storage by FTX.
Crypto exchange Kraken said: “We can confirm our team is aware of the identity of the account associated with the ongoing FTX hack, and we are committed to working with law enforcement to ensure they have everything they need to sufficiently investigate this matter.”
FTX Trading said it has US$10 billion to US$50 billion in assets, US$10 billion to US$50 billion in liabilities, and more than 100,000 creditors.
Mr Ray, a restructuring expert, was appointed to take over as CEO.
A document that Bankman-Fried shared with investors on Thursday and was reviewed by Reuters showed FTX had US$13.86 billion in liabilities and US$14.6 billion in assets.
However, only US$900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy.
The collapse shocked investors and prompted fresh calls to regulate the cryptoasset sector, which has seen losses stack up this year as cryptocurrency prices collapsed.
“Things will continue to simmer after the FTX crash,” said Mr Alan Wong, operations manager of Hong Kong Digital Asset Exchange. “With a gap of US$8 billion between liabilities and assets, when FTX is insolvent, it will trigger a domino effect, which will lead to a series of investors related to FTX going bankrupt or being forced to sell assets.” REUTERS, BLOOMBERG
