- Bloomberg said that FTX has told some customers to make wire transfers to bank accounts held by Alameda Research to make deposits.
- The practice came about because most banks were hesitant to do business with crypto companies like FTX.
- But Alameda had accounts with crypto and fintech bank Silvergate Capital.
According to Bloomberg, Sam Bankman-Fried’s FTX has told some customers to deposit money into bank accounts of Alameda Research, the trading company also founded by Bankman-Fried.
The practice came about because most banks are hesitant to do business with crypto companies like FTX, and some wire transfers are newer this year. But Alameda had some accounts with Silvergate Capital, a fintech and crypto bank, sources told Bloomberg.
Silvergate provides services “on the ramp”, meaning it helps clients transfer dollars and euros to crypto exchanges. Silvergate said it had received $11.9 billion in deposits from digital asset customers as of September 30, with those from FTX representing less than 10% of that.
Silvergate did not immediately respond to requests for comment. A spokesperson told Bloomberg that it is a federally regulated, state-authorized bank and “its solutions are built on a well-established commitment and proprietary approach to regulatory compliance.” The bank added that it is policy to refrain from commenting on customers or customer activity.
Bankman-Fried, who stepped down as CEO on November 11 after FTX Group filed for Chapter 11 bankruptcy, previously admitted to Vox that customers can transfer money to FTX by wire transfers to Alameda’s bank account, and “people are at Alameda”. “It looks like he made a $8 billion remittance,” he said. ” after the years.
The deal with Alameda further highlights the intermingling of assets in Bankman-Fried’s companies and raises additional concerns about how companies use client funds.
In recent weeks, details have emerged about Bankman-Fried’s haphazard management and careless record-keeping. John Ray III, new CEO of FTX Group, which had previously cleared troubled energy company Enron, said in a court filing that he had never seen “such a complete failure” in corporate controls, adding that Bankman-Fried’s empire lacked reliable data and finances. . protections.
Meanwhile, The Wall Street Journal reports that FTX has lent more than half of its $16 billion client funds to Alameda, while a Reuters report reported that Bankman-Fried transferred at least $4 billion from FTX to Alameda earlier this year without telling anyone. reported.