The management of cryptocurrency exchange FTX has spent tens of millions of dollars on luxuries. What is known about it?
FTX’s management has not denied itself almost anything, with significant sums from the company’s balance sheet being spent on various events, leisure time in luxury hotels and dining out at top restaurants. This was made public after new documents surfaced in the crypto-exchange’s bankruptcy case. From January 2022 to November, when FTX Digital filed for formal bankruptcy, its representatives spent at least $40 million on the aforementioned expense items. We tell you more about what’s going on.
Note that such actions are in direct contrast to the image that FTX founder Sam Bunkman-Fried has been trying to create around himself. Recall that Sam has been positioned as “the most generous billionaire”, who shares huge sums of money for charity while making do with little himself. This includes sleeping in an office on a sack chair, as well as driving a Toyota Corolla.
Just watch this video to see a clear demonstration of such PR.
Here the author clearly points out that there is no shame in having a lot of money, especially if you use it for the good of the world. Well, Sam in the video actively stresses that the world is facing a lot of serious problems and he wants to help solve them.
However, as it has now become clear, Bunkman-Fried was actively using his own users’ money without their knowledge at the time. According to the prosecution’s position, Sam discreetly withdrew clients’ money into the accounts of the trading company Alameda Research, which he had founded. The money was then used to buy real estate, donate to politicians and for other “noble” purposes.
What FTX representatives are guilty of
According to Cointelegraph’s sources, more than $15 million was spent on luxury hotels and accommodation, $5.8 million of which was spent on one residence only, the Albany Hotel. It was this luxury apartment that housed Sam Bankman-Friede’s penthouse, where he lived until his arrest last year.
Another $3.6 million was spent on the Grand Hyatt, a four-star hotel that hosted members of the British royal family in March. Another $800,000 went to the five-star Rosewood Hotel.
Rosewood Hotel
Almost 7 million dollars were spent on food and entertainment with about half of it spent on catering services. Flights cost $4 million and, oddly enough, the exchange paid more than $500,000 for postage and shipping. FTX even struck a deal with an airline to ship Amazon orders from its Miami warehouse, as the company does not deliver to the Bahamas, where the exchange’s main office was located.
FTX Bahamas employees had excellent working conditions, with unlimited petrol for their personal car, which was also available from the exchange, as well as free travel to any FTX office in other countries. Previously one employee had admitted that FTX’s internal operations were more like a cult, i.e. everything was done in the most pompous and inefficient way possible.
Sam Bankman-Fried on his way to court
Incidentally, former FTX CEO Sam Bunkman-Fried has not really complained about the poor conditions so far either. Recall that he was released from the courtroom on $250 million bail and is now spending his time at his parents’ home in Palo Alto under house arrest.
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As we’ve already noted, at the same time as his lavish life as head of FTX, Sam was also actively creating an image around himself as a “good samaritan” – he was often glowing in various charity campaigns and even lobbied for certain interests in political races inside the US. Now the exchange’s new management, headed by lawyer John Ray III, is trying to recover FTX’s donations to pay off the company’s debts.
Specifically, the exchange’s charitable arm, Future Fund, had by the end of September last year given more than $160 million to 110 non-profit organisations, including biotech start-ups and university researchers developing a vaccine for COVID-19. More specifically, the fund gave $3.6 million to AVECRIS, a company working on the vaccine’s genetic platform.
Future Fund tweet with plans for future donations for 2022
Meanwhile, Bankman-Frieda’s representatives have said in court that all charitable transactions were allegedly made solely from the company’s profits and not from its users’ funds. This has yet to be established by the court – there is no concrete evidence yet of embezzlement of customer funds specifically for charity, but given the practices of negligent management of the exchange, they may well turn up in the future.
We think this outcome of the FTX collapse case is rather amusing. Apparently Sam Bunkman-Fried knew about the incredible expenditure of the company's management, but at the same time created the image of a generous man who needs practically nothing. Well that must have contributed to building trust from people who had not previously used his exchange.
Be that as it may, it is now up to the prosecution to determine whether funds from ordinary FTX users were used for all of the above. If confirmed, this could create further problems for Sam.
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