FTX used $200 million of customer funds for two ventures, investigated by SEC

On December 22, 2022, FTX founder Sam Bankman-Fried appeared in a New York courtroom following his arraignment. The US Securities and Exchange Commission has charged Bankman-Fried with orchestrating a scheme to defraud equity investors. According to the SEC, $200 million of the billions of dollars of customer deposits were used to fund investments in two companies.

The two investments, in Dave, a fintech company, and Mysten Labs, a Web3 company, have been linked to customer money being used by FTX and Bankman-Fried. Dave CEO Jason Wilk has stated that FTX's investment in Dave is scheduled to be repaid, with interest, by 2026. Mysten Labs is a privately held company, and as such, there is no process in U.S. bankruptcy code for clawing back funds.

Two of Bankman-Fried's lieutenants have pled guilty to federal charges over the illicit use of customer funds for trading and venture investments, and Bankman-Fried is required to return to the US to face the charges and pay a hefty $250 million bond. The case continues as investigators and FTX lawyers attempt to retrace the outflow of FTX funds and establish whether customer money funded Bankman-Fried's investments. If FTX bankruptcy trustees can establish that client money funded Bankman-Fried's investments, they could pursue recovery of those funds.


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