While everyone knows Sam Bankman-Fried(SBF), the head of the collapsed FTX exchange, was involved in fraudulent activity and a scammer, they know little about his being a real estate mogul. While running the exchange, he cashed out some of the exchange’s funds and purchased properties totaling $243 million.
SBF authorized multiple real estate purchases
Sam Bankman-Fried purchased properties worth over $243 million in 2021 and 2022 using customer funds for himself, his parents, his employees, and their friends and families, according to the latest debtor’s report. His most expensive purchase was a $30 million penthouse in Albany signed by Ryan Salame, the president of FTX Property, and they mentioned that its intended use was as a “residence for key personnel.”
The FTX Group purchased properties worth over $18 million in the Bahamas on the Albany Honeycomb units. A similar unit, 6C, has about 6,000 square feet based on a listing from a real estate company. Notably, Albany is an exclusive luxury community with over 600 acres featuring a golf course and a full-service spa, among other amenities.
Some three condominiums on One Cable Beach costing between $950,000 and $2 million were purchased by Nishad Singh, the former head of engineering at FTX, Gary Wang, an FTX co-founder, and SBF to put into residential use.
SBF also spent $16 million purchasing Old Fort Bay Lot A on April 7, 2022. Other real estate properties were marked for commercial use, with cluster homes worth $8.55 million being used as FTX headquarters. Another 4.95-acre plot was labeled as development for office space for the exchange.
SBF misused customer funds to acquire the real estate
According to the report filed earlier, the FTX exchange owed its customers more than $8.7 billion following the misuse and commingling of their deposits. About $6.4 billion was owed to customers through fiat and stablecoin. The report further highlighted that only about $7 billion had been recovered and that the search for more FTX assets was going on with anticipated additional recoveries.
The investigation also generated a picture of the management of FTX and at least one senior attorney who willfully misappropriated their clients’ money. The founder and his team executed false documents, lied to auditors and banks, and even went as far as to move the FTX Group from one jurisdiction to another to avoid them getting caught in their lies. While SBF had a lot of money lying around, it can easily seem like it all belonged to him, especially considering that he kept an account in Excel and approved financial transaction orders in an internal chat.
FTX also created a sham customer account to help reflect the hidden fiat current liability. The FTX Senior Executives and Ellison referred to the account only as ‘our Korean friend’s account’ to avoid further scrutiny. This account showed that their ‘Korean friend’ had $8.9 million that belonged to the exchange. The company also lied to its banking partners regarding using their accounts. A former Alameda Research employee confirms that the company made no meaningful distinction between Alameda funds and customer funds.
In the recent statement regarding FTX debtors, CEO John J. Ray III, in charge of the bankruptcy team, highlighted that FTX’s reputation as an industry leader in customer service was always a sham. According to Ray in the study, the FTX Senior Executives did not commingle and squander customer funds by accident, but rather it was done on purpose and at their direction.
FTX investigations still ongoing amid the bankruptcy proceedings
FTX debtors recently released their second report amounting to the 7 billion discovery in liquid assets from FTX. While it still is less than the $8.7 billion owed, the gap is closing. According to the file documents, tracking the assets was hard since the misuse of FTX customer funds had gone on for several years. The 38-page document revealed details of FTX’s spending, including the expensive real estate purchases and donations. They also highlighted transfers between an Alameda account and FTX totaling $2.2 billion of the funds. Earlier research by Ray in April had also exposed the inner FTX workings saying that the exchange did not keep tabs on the employee payrolls.
Amid bankruptcy proceedings in Delaware, the FTX Debtors’ review is ongoing, and a third report will come out in August 2023.
