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FTX spent $300 million on real estate in the Bahamas, which was run as Bankman-Fried’s “personal fiefdom,” lawyers say.

FTX spent $300 million on real estate in the Bahamas, which was run as Bankman-Fried’s “personal fiefdom,” lawyers say.

FTX was targeted as a “personal fiefdom” of former CEO Sam Bankman-Fried, lawyers for the collapsed crypto exchange said at its first bankruptcy hearing as they outlined ongoing challenges such as hacks and large missing assets.

In its highest-profile crypto launch to date, FTX sought protection in the United States after traders pulled $6 trillion from the platform in three days and after rival exchange Binance abandoned a bailout deal. Approximately one million creditors suffered billions of dollars in losses as a result of the collapse.

A lawyer for FTX said in a bankruptcy filing Tuesday that the company now plans to sell off healthy business units, but that it has been subject to cyberattacks and was missing “significant” assets. FTX said on Saturday that it has launched a strategic review of its global assets and is preparing for the sale or reorganization of some businesses.

The hearing was held in US Bankruptcy Court in Wilmington, Delaware and was broadcast live to approximately 1,500 viewers on YouTube and Zoom.

A lawyer also said the company was run as a “personal fiefdom” for Bankman-Fried, who spent $300 million on real estate (such as condos and vacation properties). FTX, led by new CEO John Ray since the bankruptcy filing, has accused Bankman-Fried of working with Bahamian regulators to “undermine” the US bankruptcy case and shift assets overseas.

Bankman-Fried did not immediately respond to an email seeking comment.

Reuters previously reported that Bankman-Fried’s FTX, its parent and top executives of the failed crypto exchange bought at least 19 properties in the Bahamas worth nearly $121 million over the past two years, official property records show.

Lawyers have also said that there should be an investigation into Binance’s sale of FTX in July 2021. Binance

he bought a stake

FTX in 2019.

A presentation Monday by Ed Mosley of Alvarez & Marsal, a consulting firm that advises FTX, showed on Sunday that FTX’s cash balance of $1.24 billion was “significantly larger” than expected.

It includes about $400 million in accounts related to Alameda Research, a crypto-trading firm owned by Bankman-Fried, and $172 million in FTX’s Japanese arm.

Reuters reported that Bankman-Fried secretly used $10 trillion in client funds to fuel its trading business, and that at least $1 trillion of those deposits disappeared.

DISCUSSION NAME

During the hearing, FTX representatives argued that the names of clients should be kept confidential because their disclosure could destabilize the crypto market and open clients up to hacks. FTX also argued that its customer list is a valuable asset, and disclosing it could harm future sales efforts or allow rivals to poach its user base.

A judge said those names could remain withheld until a future court hearing.

FTX’s lawyers also described an uneasy truce with court-appointed liquidators overseeing the wind-down of FTX’s Bahamian unit, FTX Digital Markets.

The two sides reached an initial agreement to coordinate US-based bankruptcy proceedings before Judge John Dorsey, avoiding the possibility of conflicting rulings by two different US bankruptcy judges. But the two sides indicated they still have broader disagreements over coordinating the recovery and preservation of assets held by various FTX affiliates.

Bankman-Fried, FTX and the Bahamian liquidators did not immediately respond to requests for comment.

FEARFUL COUNTS

FTX’s fall from grace has sent tremors through the crypto world, sending bitcoin to its lowest level in two years and sparking fears of contagion from the collapse of the crypto market this year among other companies.

Major US crypto lender Genesis said on Monday it was trying to avoid bankruptcy after the collapse of FTX forced it to suspend client redemptions.

“Our goal is to resolve the current situation amicably without having to file for bankruptcy,” a Genesis spokeswoman said in an emailed statement to Reuters, adding that it is still in talks with creditors.

A Bloomberg News report, citing sources, said Genesis was struggling to raise fresh cash for its lending unit.

The Wall Street Journal reported, citing sources, that Genesis approached Binance for an investment, but the crypto exchange decided against it, fearing a conflict of interest. Genesis also approached private equity firm Apollo Global Management for capital support, the WSJ said.

Apollo did not immediately respond to Reuters’ request for comment on the WSJ report, while Binance declined to comment.

Crypto exchange Gemini, which runs a crypto lending product in partnership with Genesis, tweeted on Monday that it was continuing to work with the company to exchange funds from its “Earn” program that generates profitability for its users.

Gemini said on its blog last week that its other products and services were not affected after Genesis paused the withdrawals.

Since the implosion of FTX, some crypto players have been turning to decentralized exchanges known as “DEXs,” where investors trade on a peer-to-peer blockchain.

The DEX’s overall daily trading volume jumped to its highest level since May 10, when FTX spiked, according to data from market tracker DeFi Llama, but has pared gains since.

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