At lot of people lost a lot of money in the FTX fiasco. $8 billion is the number generally quoted for how much was missing from FTX accounts. Where did the FTX money go? Certainly the collapse in value of the FTT token accounts for much of the loss. FTT peaked in value at $79.53 in September of 2021 and was trading at about $24 in the months before the collapse. It currently trades at $1.51. However, crypto and dollar assets with FTX amounted to much more. And much more was spent during the FTX heyday. Here is a glimpse of where all that money went.
FTX Political Donations
Lawyers in FTX bankruptcy proceedings say that roughly $90 million of FTX assets went to campaign contributions. FTX is asking for the money back from the politicians who received these donations. Prosecutors are alleging that the bulk of these contributions were illegal. According to a Federal Court indictment, both Bankman-Fried and other FTX executives made more than three hundred separate donations. They were illegal because they were made using fictitious names (straw donors) and/or paid with corporate money from FTX. Bankman-Fried apparently wanted to avoid having such contributions reported as by him.
Bankman-Fried Real Estate Purchases
Reuters reported that FTX purchased more than $300 million in property in the Bahamas for Bankman-Fried himself, senior FTX staff, and Bankman-Fried’s parents. While some properties were allegedly set up for commercial use, the bulk of these were use by Bankman-Fried and others in the FTX upper echelons. His parents are allegedly trying to give back their Bahamas property.
The FTX Shopping List
The New York Times provides an FTX shopping list of how FTX spent its crypto money. It includes a $10 million investment in a “transparent news” startup which says it plans to return the money. $2.5 million from FTX affiliate Alameda Research went for a fifty-two foot yacht for its co-CEO. FTX spent $135 million to name for 19 years the arena where the Miami Heat play. It has since been renamed. $96 million went to pay for rights to be the office crypto exchange partner for the League of Champions e-sports league. A $20 million investment went for the now famous “don’t be like Larry” ad that ran during the Super Bowl. $24.4 million went for “Ape In” NFT art. The last in the list of greater than $10 million expenditures went for a community bank in rural Washington State where Bankman-Fried stashed another $50 million in deposits. Their list includes numerous other “small expenses” in the ten to hundred thousand dollar range including a campaign contribution to George Santos who got his seat in Congress with a pack of lies and whose seat in Congress is therefore in jeopardy.
What Was Wrong with Spending FTX Company Money?
This gets down to the question of how much of the problem with FTX was stupidity and how much was fraud. Many businesses invest in other businesses. Many spend money to promote their businesses. When they cross the line to buying property, yachts, vacations and more for their employees, those expenses need to be declared in the taxes of the recipients. Contributions to political campaigns in order to obtain favors is unethical. Contributions with customer money is fraud.
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