Source: https://www.linkedin.com/feed/update/urn%3Ali%3AugcPost%3A7008614723722117120
#SEC vs #SBF #Lawsuit: Full-Text Download From SEC Web Site: https://lnkd.in/gs56CYX8 : Regarding $8 #Billion “missing funds” from #FTX #investors #deposits we discussed earlier, here are related specifics:
#ControlDoctrine
#Accounting #Auditing #Compliance #Controls #RiskManagement
#BankmanFried directed FTX to have customers send funds to #NorthDimension in an effort to #hide the fact that the #funds were being sent to an account controlled by #Alameda. Alameda did not segregate these #customer #funds, but instead #commingled them with its other #assets, and used them indiscriminately to fund its #trading #operations…
This multi-billion-dollar liability was reflected in an internal account in the FTX database that was not tied to Alameda but was instead called “fiat@ftx.com.” Characterizing the amount of #customer #funds sent to Alameda as an #internal #FTX #account had the effect of #concealing #Alameda’s #liability in FTX’s internal systems.
In 2022, FTX began trying to separate Alameda’s portion of the liability in the “fiat@ftx.com” account from the portion that was attributable to FTX (i.e., to separate out customer deposits sent to Alameda-controlled bank accounts from deposits sent to FTX-controlled bank accounts). Alameda’s portion — which amounted to more than $8 billion in FTX customer assets that had been deposited into Alameda-controlled #bank #accounts — was initially moved to a different account in the FTX database.
#Why #Fed #Chair #Powell Must Do #Volcker To Clean #Crypto #Mess:
https://lnkd.in/gQ62-yHh
However, because this change caused FTX’s internal systems to automatically charge Alameda #interest on the more than $8 billion liability, SBF directed that the Alameda liability be moved to an account that would not be charged #interest. This account was associated with an individual that had no apparent connection to Alameda. As a result, this change had the effect of further #concealing #Alameda’s #liability in FTX’s internal systems.
Bankman-Fried was well aware of the impact of Alameda’s positions on FTX’s risk profile. On or about Oct 12, 2022, for example, SBF, in a series of tweets, analyzed the #manipulation of a #digital #asset on an unrelated #crypto #platform. In explaining what occurred, SBF distinguished between an asset’s “current price” and its “fair price,” and recognized that “large positions – especially in #illiquid #tokens – can have a lot of impact.”
SBF asserted that FTX’s #risk #engine required customers to “fully collateralize a position” when the customer’s position is “large and illiquid enough.” But SBF knew… that by not mitigating for the impact of large and illiquid tokens posted as collateral by Alameda, FTX was engaging in precisely the same conduct, and creating the same risk…
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