FTX Debtors Reveal $6.8 Billion Hole in Balance Sheet Amidst Financial Discrepancies and Payments to Insiders

According to a presumption precocious submitted by the FTX debtors connected March 16, Sam Bankman-Fried’s companies had a $6.8 cardinal spread successful their intercompany equilibrium expanse erstwhile they filed for Chapter 11 bankruptcy protection. FTX and its conglomerate of firms person debts of astir $11.6 billion, including lawsuit claims and assorted different liabilities.

FTX’s $6.8 Billion Gap

The FTX debtors person released a 3rd presumption that provides an overview of FTX’s debts and liabilities. The presumption reveals that, portion a important magnitude of wealth is owed to customers, FTX and its fewer subsidiary firms besides beryllium funds to definite vendors, counterparties, and unpaid invoices. Some of the vendors see Margaritaville Beach Resort owned by Jimmy Buffett, Amazon Web Services (AWS), Fairview Asset Management, Stripe, Meta, Trulioo, Spotify, Turner Network Television, and American Express.

Advisers concluded that erstwhile FTX filed for bankruptcy, the much than 100 companies nether its umbrella had a $6.8 cardinal spread successful their equilibrium sheet. Approximately $4.8 cardinal of this magnitude is against a colossal $11.6 billion, according to the presentation. FTX US had a shortfall of astir $87 million, contempt Bankman Fried’s repeated claims that the U.S. subsidiary was solvent. The disgraced FTX co-founder’s quantitative trading firm, Alameda Research, held the “vast bulk of third-party loans,” according to the advisers’ notes.

Alameda had an absorbing narration with galore entities and protocols, arsenic it borrowed from “approximately 80 antithetic counterparties.” Furthermore, overmuch of the collateral was based successful FTT, SRM, and SOL, and crypto plus volatility “resulted successful galore lenders issuing borderline calls and telephone notices.” FTX debtors reviewed interior communications, onchain activity, and indebtedness documents and discovered that loans were not recorded successful FTX’s humanities accounting records. “Additional tracing of wallet and blockchain enactment remains an ongoing matter,” the advisers explained.

Forty-nine companies are shade towns, identified arsenic “dormant” due to the fact that they person nary humanities payments oregon fiscal information. Advisers accidental 9 FTX entities provided their outgo records directly, and 12 FTX entities successful Europe and Asia did the same. About 30 of the FTX entities utilized Quickbooks to support operational books and records. Regarding governmental donations, “payments identified connected [Federal Election Commission] website that were not classified arsenic donations connected the debtors’ books and records,” the presumption notes.

Additionally, a leafage called “payments to insiders” shows Bankman-Fried was paid astir $2.247 billion. Former FTX manager of engineering Nishad Singh reportedly received $587 million, and FTX co-founder Gary Wang earned $246 million. Former FTX co-CEO Ryan Salame allegedly received $87 million, and Sam Trabucco made $25 million, according to FTX debtors. The erstwhile Alameda CEO, Caroline Ellison, received $6 cardinal successful payments and loans, arsenic elaborate successful the payments to insiders spreadsheet.

Overall, FTX debtors discovered large fiscal and accounting discrepancies wrong the company, on with important payments made to insiders. The concern is opaque, but it’s evident that FTX’s fiscal problems are much extended than initially reported. The presumption notes that the fiscal information was not audited and is taxable to alteration arsenic the bankruptcy proceedings continue.

What bash you deliberation this means for the aboriginal of FTX and its subsidiaries? Share your thoughts and insights successful the comments below.