Sam Bankman-Fried ran FTX like a personal fiefdom, lawyers say
A substantial amount of FTX’s assets are either missing or stolen, a lawyer for the failed crypto exchange said in court, vowing to cast a wide net to secure potentially billions of dollars in funds that passed through the firm he called the “personal fiefdom" of co-founder Sam Bankman-Fried.
Tuesday’s hearing marked an inflection point for FTX’s bankruptcy case as its new leaders begin chasing down what assets they can salvage and trying to determine who might be responsible for the loss of customers’ money.
“FTX was in the control of inexperienced and unsophisticated individuals, and some or all of them were compromised individuals," said James Bromley, counsel to FTX’s new management, at its first appearance in Delaware bankruptcy court after filing the largest-ever crypto chapter 11 case earlier this month.
Mr. Bankman-Fried didn’t respond to a request for comment.
The new management is only beginning to take stock of how much FTX lost under Mr. Bankman-Fried on risky trading bets, and it has assembled a team of investigators to lead a global hunt for money that left FTX before it failed.
Prosecutors in New York and the U.S. Securities and Exchange Commission are examining the firm’s collapse, which unleashed a new wave of financial stress in the cryptocurrency industry.
Customers’ funds on the exchange are frozen, and they are losing hope they will ever get much back. The size of the gap between FTX’s obligations to its customers and available assets it could use to help pay them still isn’t known, though Mr. Bromley said its individual and institutional customers number in the millions. The 50 largest creditors alone are owed more than $3 billion, court papers show.
FTX, a target of continuing cyberattacks that
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