Thursday, June 13, 2024

FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall

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FTX’s chief executive told investors this week that an affiliated trading firm owes the crypto exchange about $10 billion

Crypto exchange FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter said.

FTX Chief Executive Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, one of the people said.

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