Transactions to and from Alameda Research's bank accounts show it often used FTX customer money to pay back loans, fund political donations, invest in other companies and buy property, an expert witness for the prosecution testified in the ongoing criminal trial of Sam Bankman-Fried on Wednesday.
Peter Easton, an accounting professor at the University of Notre Dame, told the court he analyzed bank and crypto transactions between the FTX exchange, its sister trading company Alameda Research and third parties. Easton said he had prior experience with crypto, as he worked on the a court case between the Securities and Exchange Commission and Ripple Labs.
Easton gave an emphatic "Oh yes!" when he was asked by Assistant U.S. Attorney Nicolas Roos if customer money had been spent.
For example, right before FTX invested $400 million in Modulo capital, a hedge fund founded by former Jane Street traders, Alameda Research accounts received funds from FTX's treasury, Easton said, and then transferred them to Modulo.
"All of the purchase of Modulo Capital was made using customer funds," he said.
Alameda investments, real estate purchases
Similar chains of transactions preceded FTX's investments in the mining company Genesis Digital Assets, Anthony Scaramucci's hedge fund SkyBridge Capital, banking app Dave, PR firm K5, AI startup Anthropic and Robinhood shares, as well as the buyout of FTX’s own shares from Binance, Easton said.
He said that according to his analysis, FTX and Alameda's purchases of real estate in the Bahamas also followed that pattern. Same was true for FTX's political donations, except that they would go through the accounts of FTX executives like Nishad Singh or Ryan Salame.
That included contributions to political action committees GMI, Mind the Gap (led by Bankman-Fried's mother Barbara Fried) and an advocacy group Guarding Against Pandemics, led by Sam's brother Gabriel Bankman-Fried.
When Alameda paid back the money it borrowed from institutional lenders like BlockFi, Bitgo, Genesis, Abra, Maple Finance, Anchorage, Celsius, Nexo, Voyager, TrueFi and Ledn, at least parts of those payouts came from FTX's customer deposits shortly before the transaction, Easton said.
BlockFi, Celsius, Genesis and Voyager have since filed for bankruptcy themselves.
(With reporting assistance from Zack Abrams.)
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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