According to a Reuters report, FTX used customer funds to continue supporting Alameda Research, after the latter went through a series of losses from its dealings. One of the losses was a $500 million loan contract with the defunct cryptocurrency lender Voyager Digital. In a September auction, the American division of FTX paid $1.4 billion for the assets of Voyager.
CEO Sam Bankman-Fried (SBF) reportedly transferred $4 billion in FTX funds secured by assets that include FTT, as well as shares in Robinhood Markets Inc. Part of the funds, were customer deposits, according to two people who are close to the matter, Reuters reported.
According to the two persons, SBF kept other FTX officials in the dark about the plan to support Alameda out of concern that word may get out.
However, a story by media outlet CoinDesk about a leaked balance sheet supposedly revealed that a large portion of Alameda’s $14.6 billion assets were held in FTT. Alameda CEO Caroline Ellison tweeted that the balance sheet only represents a subset of their corporate entities. More than $10 billion in assets were not included, she said.
Nonetheless, speculation around Alameda’s balance sheet grew, and then came the blow in the form of Binance deciding to liquidate its FTT holdings. The consequent chain reaction led to the withdrawal of $6 billion worth of crypto from FTX in just 72 hours.
Will FTX survive the collapse?
Long answer short, yes but with fresh funding. Without funding, there is almost no chance that FTX would survive.
Popular crypto personality, Cobie, apparently got his hands on a leaked Stack message from SBF that reveals FTX’s plans.
As per the message, the exchange plans on a new raise. SBF is clear when he says that without fresh funds, it will be almost impossible for FTX to survive.
At press time, FTT was trading at $2.87, down by 33.2% in the last 24 hours.