FTX’s venture capital backers face ‘serious questions’, US official says Sam Bankman-Fried has been accused of stealing from FTX customers to pay debts incurred by Alameda Research. PHOTO: REUTERS
UPDATED 23 JAN 2023, 6:20 PM SGT
WASHINGTON – The failure of Sam Bankman-Fried’s FTX crypto empire raises “serious questions” about how well venture capitalists and money managers scrutinised his operations before investing client funds, a United States Commodity Futures Trading Commission (CFTC) official said.
“What kind of due diligence did they conduct?” commissioner Christy Goldsmith Romero said on Friday in a Bloomberg Television interview. “Why did they turn a blind eye to what should have been really flashing red lights?”
If a fund entrusts millions of dollars and then a year later has to write it off completely, it raises such questions, the regulator said.
She also pointed to comments by Mr John J. Ray III, who took over as FTX’s chief executive as part of its bankruptcy and has since described a lack of record-keeping and key controls when he was appointed.
It is worth considering, Ms Goldsmith Romero said, whether backers may have had potential conflicts of interest, given the interconnectedness of the crypto industry.
“Were there some conflicts that prevented them from really paying attention to the due diligence and the facts that they were uncovering?” she said.
US prosecutors meanwhile have seized nearly US$700 million (S$921.5 million) in assets from Bankman-Fried in January, largely in the form of Robinhood stock, according to a Friday court filing.
Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto hedge fund Alameda Research, has pleaded not guilty to fraud charges. He is scheduled to face trial in October.
The Department of Justice (DOJ) revealed the seizure of Robinhood shares earlier in January, but it provided a more complete list of seized assets on Friday, including cash held at various banks and assets deposited at crypto exchange Binance.
The ownership of the seized Robinhood shares, valued at about US$525 million, has been the subject of disputes between Bankman-Fried, FTX and bankrupt crypto lender BlockFi.
DOJ also said that assets in three Binance accounts associated with Bankman-Fried were subject to criminal forfeiture, but did not provide an estimate of the value in those accounts. BLOOMBERG, REUTERS
https://www.straitstimes.com/busine...ers-face-serious-questions-cftc-official-says
UPDATED 23 JAN 2023, 6:20 PM SGT
WASHINGTON – The failure of Sam Bankman-Fried’s FTX crypto empire raises “serious questions” about how well venture capitalists and money managers scrutinised his operations before investing client funds, a United States Commodity Futures Trading Commission (CFTC) official said.
“What kind of due diligence did they conduct?” commissioner Christy Goldsmith Romero said on Friday in a Bloomberg Television interview. “Why did they turn a blind eye to what should have been really flashing red lights?”
If a fund entrusts millions of dollars and then a year later has to write it off completely, it raises such questions, the regulator said.
She also pointed to comments by Mr John J. Ray III, who took over as FTX’s chief executive as part of its bankruptcy and has since described a lack of record-keeping and key controls when he was appointed.
It is worth considering, Ms Goldsmith Romero said, whether backers may have had potential conflicts of interest, given the interconnectedness of the crypto industry.
“Were there some conflicts that prevented them from really paying attention to the due diligence and the facts that they were uncovering?” she said.
US prosecutors meanwhile have seized nearly US$700 million (S$921.5 million) in assets from Bankman-Fried in January, largely in the form of Robinhood stock, according to a Friday court filing.
Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto hedge fund Alameda Research, has pleaded not guilty to fraud charges. He is scheduled to face trial in October.
The Department of Justice (DOJ) revealed the seizure of Robinhood shares earlier in January, but it provided a more complete list of seized assets on Friday, including cash held at various banks and assets deposited at crypto exchange Binance.
The ownership of the seized Robinhood shares, valued at about US$525 million, has been the subject of disputes between Bankman-Fried, FTX and bankrupt crypto lender BlockFi.
DOJ also said that assets in three Binance accounts associated with Bankman-Fried were subject to criminal forfeiture, but did not provide an estimate of the value in those accounts. BLOOMBERG, REUTERS
https://www.straitstimes.com/busine...ers-face-serious-questions-cftc-official-says
