FTX founder Bankman-Fried secretly moved $10 billion to Alameda Research using a “backdoor” he built into FTX software without alerting external auditors
Just when you think it can’t get any worse, Reuters reported early this morning that disgraced FTX founder Sam Bankman-Fried secretly moved $10 billion to Alameda Research using a “backdoor” he built into FTX software without alerting external auditors.
According to the report, the collapsed crypto exchange FTX had a “backdoor” built into its accounting software developed by Bankman-Fried, which he used to move billions without triggering alerts. The “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including external auditors.
In a subsequent examination of FTX’s financials, two people familiar with the inner working of the company told Reuters that FTX legal and finance teams also learned that Bankman-Fried implemented what they described as a “backdoor” in FTX’s book-keeping system, which was built using bespoke software.
The sources told Reuters the “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including external auditors. “This setup meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX,” Reuters reported, citing the two sources. However, Bankman-Fried denied implementing a “backdoor” in his text message to Reuters.
Meanwhile, there were reports that FTX was hacked overnight and at least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, Reuters stated, citing two people familiar with the matter.
Meanwhile, there were reports that Bankman-Fried had escaped from the Bahamas and in he’s now in Argentina.
As we reported yesterday, the Bahamas Securities Commission (BSC) froze the assets of FTX Digital Markets “and related parties.” The BSC has also appointed a provisional liquidator as the agency seeks to place FTX into receivership, i.e. bankruptcy, the agency said in a statement issued late on Thursday.
Bankman-Fried first came into the spotlight in 2020 after he donated a whopping $5.2 million to Joe Biden’s campaign, making him the second-biggest donor.
Bankman-Fried founded FTX in 2019 with his co-founder Gary Wang. The Bahamas-based crypto exchange FTX offers derivatives products like futures and options as well as spot trading. Once an unknown startup, FTX has become a key player in the crypto space, rivaling the likes of Coinbase and Binance.