FTX crisis: Ex-head of Alameda warned of multibillion-dollar deficit

Recently it became known about high-profile events in the world of cryptocurrency exchanges. According to court documents, the former head of Alameda Research, Caroline Ellison, allegedly warned about a catastrophic deficit in FTX long before its collapse. It is alleged that in March 2022, she made a note about a $10 billion deficit in the exchange, which subsequently went bankrupt in November of the same year.

It seems that FTX’s problems worsened by August 2022, when management admitted that it owed its customers more than $ 8 billion, and could not return these funds in any way. Now the new management of the exchange is actively trying to return “millions of dollars” in cash and challenge more than $1 billion in allegedly fraudulent transactions.

It turns out that Ellison and FTX technical director, Gary Wang, have already pleaded guilty to crimes related to the FTX collapse and agreed to cooperate with law enforcement agencies. As part of the investigation, Caroline Ellison also disclosed information about the manipulation of the FTT token price, and also admitted to deliberately deceiving creditors. The head of Alameda Research herself, along with the former head of FTX, Sam Bankman-Freed, also faces charges of hiding agreements from investors and falsifying financial statements.

FTX co-founder and CTO, Gary Wang, admitted that he was instructed to make changes to the platform code in order to grant Alameda special privileges.

With the new CEO of the exchange, John Ray, in November 2022, it was announced that the company had completely lost control of cash flow and that reliable financial information was missing.

Recall that in March 2023, Sam Bankman-Fried, according to the data provided, received a significant amount of $ 2.2 billion from FTX and Alameda Research. The U.S. Attorney’s office has charged Bankman-Fried with 13 criminal offenses, but he has not yet pleaded guilty to any of them.

The circumstances and details of this story raise serious questions and require additional investigations by the competent authorities.

Published: 21 July, 2023

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