Troubled crypto firm FTX collapsed after being “run as a personal fiefdom of Sam Bankman-Fried”, a US bankruptcy court has heard.
The former FTX boss led the firm once valued at $32bn (£27bn), but lacked basic money controls, a lawyer leading the bankruptcy proceedings said.
The true state of FTX’s finances was only now being understood, he said.
He also claimed Bankman-Fried’s team spent roughly $300m on holiday homes and property for senior staff.
Only now do we realize that “the emperor had no clothes,” attorney James Bromley said, describing the situation as “one of most abrupt and difficult collapses in the history of corporate America.”
FTX was a cryptocurrency exchange allowing people to buy Bitcoin and other crypto coins in exchange for traditional money. Many customers used their FTX digital wallets like bank accounts, expecting their funds to be safe.
The court was shown a timeline of how it became the second-largest cryptocurrency exchange before collapsing in just eight days once details about the company’s lack of financial stability were leaked online.
Bankman-Fried resigned and the firm filed for bankruptcy protection, seeking the court’s oversight as it attempts to resolve its debts.
More than one million investors had cryptocurrency stored on the FTX exchange and are owed money, which they may not get back.
Company records show FTX customers were based in 27 separate countries with Cayman Islands, Virgin Islands, Great Britain and China having the highest proportion of users.