According to a recent court hearing, bankrupt cryptocurrency exchange FTX utilised consumer cash to repurchase all of the company’s shares owned with rival exchange Binance.
As part of the repurchase, Binance CEO Changpeng Zhao stated in a 2022 post that the business has received nearly $2.1 billion in FTX’s FTT tokens and Binance US dollar (BUSD) stablecoins.
As part of the continuing Sam Bankman-Fried trial, the U.S. Department of Justice (DOJ) has recruited Peter Easton, an accounting professor at the University of Notre Dame, to track down the billions of dollars that flowed between Alameda and FTX.
When questioned if FTX had ever spent user deposits by the court, Easton said, “Oh, yeah.” According to reports, the professor provided testimony regarding the use of these user deposits for charitable donations, the purchase of real estate and enterprises, and political contributions.
Binance’s shares in FTX were repurchased using these deposits. “Funds from FTX exchange customers accounted for over a billion dollars,” Easton stated in court.
A strategic agreement between the two companies saw Binance spend an undisclosed sum of money in FTX in 2019. Compared to the nearly $50 billion it processed at its peak, the then-baby FTX processed $500 million in deals every day. During time, their relationship deteriorated steadily and even became public on social media.