FTX Digital Markets commingled client funds, Bahamian liquidators say

Quick Take

  • FTX’s Bahamian entity commingled customer funds, according to joint provisional liquidators unwinding the firm’s bankruptcy in the Bahamas, and kept “limited” financial records.
  • FTX CEO John Ray has made similar statements about the firm’s haphazard financial record-keeping.

FTX Digital Markets, the crypto exchange’s Bahamian entity, commingled customer and corporate funds, according to a report filed in court earlier this month.

The joint provisional liquidators unwinding FTX’s bankruptcy in the Bahamas filed a lengthy report on Feb. 8 that said the company had “limited” accounting records and made “little distinction between what represents, potentially, client monies and corporate funds." 

New FTX CEO John Ray has made similar claims about the lack of financial records across the firm’s more than 100 entities. Meanwhile, former FTX CEO Sam Bankman-Fried has pleaded not guilty to criminal charges related to the mishandling of customer funds, among other allegations. Two former executives have pleaded guilty to criminal charges.

FTX Digital Markets has approximately $219.5 million in multiple bank accounts, the liquidators said, but it’s not clear which funds were held for the benefit of FTX Digital Markets customers. 

“It appears that client monies have been commingled such that it may not be possible to clearly identify sums that constitute client monies as opposed to general corporate funds,” the report said. 

Millions of customers

The report was filed in court by Kevin Cambridge, a partner at PricewaterhouseCoopers Advisory’s Bahamas firm who was appointed as a joint provisional liquidator in the bankruptcy case. It said FTX Digital Markets may have more than 2.4 million customers in more than 230 jurisdictions around the globe, including 10,500 institutional customers. 

The liquidators also identified intercompany debts worth $276.2 million, the report said. That includes $256.3 million owed by FTX Property, which “appears to represent funds transferred by FTX Digital to fund commercial and residential property acquisitions” in the Bahamas. 

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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