FTX was run as a ‘personal fiefdom’ of Bankman-Fried, says company lawyers

FTX’s lawyers have alleged that substantial assets were missing from the firm as the bankruptcy proceedings continue.

Lawyers of FTX have claimed that the company was run as a ‘personal fiefdom’ of Sam Bankman-Fried. The lawyers revealed this in the first bankruptcy hearing of the company, adding that they were facing challenges as a result of hacks and substantial missing assets.

During the hearing on Tuesday, a lawyer of FTX said the company intends to sell off healthy business units. However, the lawyer lamented that FTX has been the subject of cyberattacks and had “substantial” assets missing. The lawyer added that;

“FTX had been run as a “personal fiefdom” of Bankman-Fried, with $300m spent on real estate such as homes and vacation properties for senior staff.”

The hearing comes a few days after FTX hired US-based firm Perella Weinberg Partners LP as its lead investment bank to help with the sale or reorganisation of its subsidiaries.

FTX revealed that the FTX Debtors (FTX.com and about 101 affiliate companies) are rolling out a strategic review of all of the collapsed company’s global assets.

This latest cryptocurrency news comes after Reuters reported that Bankman-Fried, his parents, and senior executives of FTX purchased at least 19 properties worth nearly $121m in the Bahamas over the past two years.

FTX lawyers also said an investigation should be launched into Binance’s sale of its FTX equity in July 2021. Binance bought a stake in FTX in 2019 but liquidated its investment last year. Binance received $2.1 billion in FTT and BUSD tokens last year from FTX. 

A filing earlier this week by Ed Mosley of Alvarez & Marsal, a consultancy firm advising FTX, revealed that the crypto exchange has a cash balance of $1.24bn as of Sunday. 

The $1.24 billion includes roughly $400m in accounts related to Alameda Research and another $172m at FTX’s Japan arm.