Former FTX CEO Allegedly Uses Special Software to Manipulate Financial Records

 

Former FTX CEO Allegedly Uses Special Software to Manipulate Financial Records

Former FTX CEO, Sam Bankman-Fried allegedly used a special software that allowed him to move funds easily without the other party knowing, quoted from Reuters report.

However, this former FTX boss denied this and said that the 'backdoor' software did not exist.

SBF allegedly paid for the programmer to make that special software, so he could change the financial report easily without anyone knowing.

This software is designed so that even external auditors cannot find out the changes in FTX financial reports. This strengthened another alleged that the US$10 billion transaction of FTX user funds to Alameda was also undetected thanks to that software.

Serious liquidity issues lead to FTX bankruptcy. Binance, who previously agreed to take over FTX finally canceled his intention after doing the due diligence along with reports from the U.S. government investigation.

Now, FTX has officially gone bankrupt, in the midst of a shortage of US$8 billion in funds.

Former FTX CEO: Impact of Special Software Usage against Users

At least there is US$1 billion FTX user money that has disappeared since the impact of FTX crypto exchanges, reported from Reuters.

Most of the existing funds have been lost. One of the sources says the amount is around US$1.7 billion and another source says around US$1 billion to US$2 billion.

The use of special software that allows user funds to switch to Alameda has been known for a long time by. But, the missing amount of funds has been reported recently.

The financial void was revealed through the recording of the Bankman-Fried conversation to the FTX and Alameda higher-ups last week, according to the two sources of Reuters.

This recording includes an account about the current situation. The source indicates that the company's financial parties get directives from high staff at FTX.

SBF denies a transfer of US$10 billion to Alameda. Then he explained further about this.

"We didn't transfer it secretly, we were confused by internal labeling and misread it," said Sam Bankman-Fried.

But when asked more about the lost funds, to Reuters SBF only replied, “???.”

Not only SBF, Alameda and FTX are also silent with the question.

Two major events that caused the collapse of FTX, namely reports from Coindesk and Binance's decision not to take over FTX made SBF hold a meeting with some of his executives in the capital city of Bahama, Nassau to discuss how much funds are needed to cover FTX.

Bankman-Fried admitted the meeting really happened. At the meeting, SBF showed a financial report to the higher-ups and the hukumm team that FTX had already moved US$10 billion user funds to Alameda.

About US$1 or US$2 billion those funds are not counted in Alameda's assets. The financial report also did not include the money moving and how it ended.

Upon further inspection, FTX legal and financial team learned that SBF uses special software as “back door” in FTX bookkeeping system and this is used to move funds to Alameda.

FTX bankruptcy backfired for SBF. Since 2019, the wealth he collected reached US$17 billion. While the FTX value is around US$32 billion in January 2022 with BlackRock and Softbank investors.

This crisis shook the crypto world, because it made many coin values decrease. The destruction of FTX has also become a comparison to the previous great business of rubuh.

Friday (11/11/2022), John J. Ray III was appointed to replace former FTX CEO before. Ray is a restructuring specialist who overcomes Enron's liquidation issue, one of the largest in history in 2001 ago. [az]