New reveals for FTX

«We have witnessed one of the most abrupt and difficult collapses in the history of corporate America,» James Bromley of Sullivan & Cromwell told a US court yesterday. He added that bankruptcy proceedings had «allowed everyone for the first time to see under the covers and recognise the emperor had no clothes». FTX filed for US bankruptcy protection on November 11 as its customers fled and executives discovered billions of dollars in missing funds, exacerbating turmoil in cryptocurrency markets. The case has been marked by allegations of misconduct, major governance failures, and a jurisdictional dispute between the US and the Bahamas, where FTX’s small inner circle ran the business.

Bromley said the bankruptcy team had found that «substantial funds» were transferred from the exchange to Bank-man-Fried’s crypto hedge fund Alameda Research and «substantial amounts of money were spent on things unrelated to the business». He said that this included around $300mn of real estate in the Bahamas that were «homes and vacation properties used by the senior executives» of FTX. Bromley added that the company worked with the US government and global regulators, including the justice department and Securities and Exchange Commission. Prosecutors working with the justice department’s Southern District of New York and the Financial Crimes Investigation Branch of Bahamas have launched two separate criminal probes into the implosion of FTX.

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