FTX-affiliated trading firm Alameda Research reportedly made $4.1 billion in combined loans to “related parties,” with the majority going to then-FTX CEO Sam Bankman-Fried, one of his majority-owned companies and two other executives.
The loans include $2.3 billion to Paper Bird Inc., $1 billion to Bankman-Fried, $543 million to FTX’s head of engineering, Nishad Singh, and $55 million to FTX Digital Markets’ head, Ryan Salame, Bloomberg reported Thursday (Nov. 17).
FTX did not immediately respond to PYMNTS’ request for comment.
As PYMNTS reported Monday (Nov. 14), the stunning implosion of FTX came about after it was revealed that the company used customer funds to bail out Alameda Research — to the tune of around $10 billion — after Alameda itself suffered heavy losses due to trading strategies dating back to April 2021. Exchanges must back their customer funds 1:1 to ensure and insure liquidity.
The rapid demise of FTX continues to reverberate throughout the crypto and venture capital (VC) industries, rattling investor confidence and perceptions of stability across the sector.
On Thursday, John J. Ray III — appointed CEO of FTX last week as part of the bankruptcy proceedings — said FTX experienced a complete failure of corporate controls that surpassed even what he saw at Enron.
“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in a Thursday filing with the U.S. bankruptcy court.
This report comes one day after Bankman-Fried told Vox that filing Chapter 11 has his largest mistake, saying, “If I hadn’t done that, withdrawals would be opening up in a month with customers fully whole.”
Bankman-Fried also cursed regulators, saying they “make everything worse. They don’t protect customers at all.”
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