FTX Debtors Reveal $6.8 Billion Balance Sheet Hole Amid Financial Discrepancies and Payments to Insiders
According to a recent presentation by FTX debtors on March 16, Sam Bankman-Fried’s companies left a $6.8 billion hole in their intercompany balance sheets when they filed for Chapter 11 bankruptcy protection. FTX and its conglomerate have approximately $11.6 billion in debt, including accounts receivable from customers and various other payables.
FTX’s $6.8 billion gap
FTX Debtors have released a third presentation that provides an overview of FTX’s debt and liabilities. The presentation shows that while FTX and its few subsidiaries owe a significant amount of money to customers, they also owe certain vendors, counterparties and unpaid invoices. Some of the providers include Jimmy Buffett-owned Margaritaville Beach Resort, Amazon Web Services (AWS), Fairview Asset Management, Stripe, Meta, Trulioo, Spotify, Turner Network Television, and American Express.
The advisors concluded that the more than 100 companies under their umbrella had a $6.8 billion gap on their balance sheets when FTX filed for bankruptcy. About $4.8 billion of that total compares to a whopping $11.6 billion, according to the presentation. FTX US was in deficit by around $87 million, despite repeated claims from Bankman Fried that the US subsidiary was solvent. Disgraced FTX co-founder’s quantitative trading firm, Alameda Research, held the “vast majority of third-party loans,” according to advisors’ notes.
Alameda had an interesting relationship with many companies and protocols, borrowing from “about 80 different counterparties.” In addition, much of the collateral was based on FTT, SRM and SOL, and the volatility of crypto assets “led many lenders to issue margin calls and call notices.” FTX borrowers reviewed internal communications, onchain activity and loan documents and found that loans were not reflected in FTX’s historical accounting records. “The additional pursuit of Wallet– and Blockchainactivities remains an ongoing matter,” the advisers explained.
Forty-nine companies are ghost towns that have been identified as “dormant” because they have no historical payments or financial information. Advisors say nine FTX companies have provided their payment records directly, and 12 FTX companies in Europe and Asia have done the same. About 30 of the FTX units used Quickbooks to keep logs and records. Regarding political donations, “Payments identified on [Federal Election Commission] website that were not classified as a gift in the debtors’ books and records,” the presentation reads.
Additionally, a page titled “Payments to Insiders” shows that Bankman-Fried was paid approximately $2.247 billion. Former FTX engineering director Nishad Singh was reportedly paid $587 million, and FTX co-founder Gary Wang earned $246 million. Former FTX co-CEO Ryan Salame was reportedly paid $87 million and Sam Trabucco made $25 million, according to FTX debtors. Former Alameda CEO Caroline Ellison received $6 million in payments and loans, as detailed in the Payments to Insiders table.
Overall, FTX debtors discovered major financial and accounting discrepancies within the company, along with significant payments to insiders. The situation is unclear, but it is evident that FTX’s financial woes are more extensive than originally reported. The presentation indicates that the financial data has not been audited and is subject to change during the course of the bankruptcy proceedings.
What do you think this means for the future of FTX and its subsidiaries? Share your thoughts and insights in the comments below.
photo credit: Shutterstock, Pixabay, WikiCommons
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Source: Crypto News Deutsch
