Accounting professor Peter Easton provided testimony in the trial of former FTX CEO Sam Bankman-Fried, shedding light on the commingling of funds between FTX and Alameda Research. Easton’s analysis revealed that Alameda used funds from FTX customers to invest in various ventures, resulting in a negative balance of $11.3 billion with FTX in June 2022. Additionally, Alameda repaid $6.6 billion in loans to crypto lenders during the bear market, with 68% of the funds traced back to customer assets. It was also discovered that $228.5 million of customer funds were used to purchase properties in the Bahamas.In another development, evidence presented in court showed that BlockFi had warned its leadership about its over-exposure to FTX Token (FTT) in August 2021. Despite a credit memo advising against a loan to Alameda Research, Alameda continued to increase its borrowings from BlockFi. BlockFi’s founder, Zac Prince, testified that Alameda had always repaid its loans on time until the collapse of FTX in November 2022. However, Prince was unaware that Alameda was using funds from FTX customers to repay the loans. Stress scenarios presented by BlockFi’s team in 2021 predicted a significant drop in the price of FTT if Alameda defaulted.The connection between Alameda and BlockFi began in 2021, with an initial loan of $15 million to Alameda. The loans were repaid, and the relationship between the two companies deepened during the bear market. However, after the collapse of the Terra ecosystem, BlockFi recalled millions in loans from Alameda. BlockFi also entered into an agreement with FTX US for capital and a potential acquisition, but both companies eventually filed for bankruptcy.The downfall of FTX and Alameda Research occurred in November 2022. Binance initially considered acquiring FTX but decided against it due to reports of mishandled funds. Bankman-Fried publicly apologized for the exchange’s collapse, and the entire staff of Alameda Research resigned. FTX, FTX US, and Alameda Research filed for bankruptcy, and Bankman-Fried stepped down as FTX CEO.

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Information	Details
Geography	North America
Countries
Sentiment	negative
Relevance Score	1
People	None
Companies	Massachusetts Institute of Technology, K5 Global Holdings, Anthropic PBC, Alameda Research, FTX, NFL, Genesis Capital, Terra ecosystem, Modulo Capital, Dave Inc, BlockFi
Currencies	Thena
Securities	None