According to Bloomberg reports, the bankrupt FTX exchange allegedly financed its Blockfolio acquisition using large amounts of FTT tokens. Meanwhile, allegations have emerged that FTX executives used clients’ assets to fund an extravagant lifestyle.
FTX Bought Blockfolio Using Mostly FTT Tokens
The FTX crisis, which occurred last month, is still affecting the market in December. New reports claim that the exchange and its subsidiaries took part in several shady dealings.
According to reports, FTX financed its Blockfolio deal using FTT, its native token. FTX paid over $84 million to buy a 52% stake in Blockfolio, an automated trading platform.
However, 94% of the $84 million used to finance the deal were FTT tokens. This shows that the exchange might have minted the tokens used to buy the 52% share.
Previous reports claimed that FTX bought the stake using cash, crypto, and equity. But, there were no details about the value of each asset.
Meanwhile, the valuation of Blockfolio increased to $160 million after the acquisition. Also, the deal gave FTX an option to buy the entire company within two years.
Unfortunately, recent reports claim that FTX’s controlling share is mainly made up of FTT tokens. In 2022, FTX participated in several acquisitions as the exchange tried to help crumbling crypto companies.
Also read:The Sam Bankman-Fried exchange reportedly used FTT to buy Voyager, BlockFi, and other firms. As a result, the US SEC and CFTC have leveled several count changes against Bankman-Fried for alleged fraud and diversion of clients’ assets.
Crypto experts argued that the ex-CEO used users’ funds to fund a luxurious lifestyle and acquire properties.
Two Former Employees Of Bankman-Fried Plead Guilty
Binance’s decision to dump a large amount of FTT on its platform sparked massive withdrawals on FTX. This ultimately led to the company’s bankruptcy despite Bankman-Fried’s numerous attempts to raise funds.
Meanwhile, the FTX bankruptcy case is in court, and proceedings are ongoing, with a potential verdict in the coming months. In addition, a few days ago, US regulators issued several charges against former executives at FTX and Alameda Research.
The two individuals, Gary Wang, FTX co-founder, and Caroline Ellison, the CEO of Alameda Research, have since pleaded guilty to the alleged charges.
They have agreed to assist financial regulators in investigating the latest FTX crisis. Damian Williams, the Attorney of New York’s Southern District, announced the defendants’ pleas.
However, the Attorney has not announced any punishment for both of them. As the FTX case unfolds, more shady dealings continue to come to light. Meanwhile, the crypto community would have to wait for the court’s verdict.
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