By Dale Fox For Mailonline and Reuters
Published: 01:00 EST, 22 November 2022 | Updated: 11:55 EST, 22 November 2022
Disgraced boss Sam Bankman-Fried's failed FTX splashed out on least 19 properties worth nearly $121 million in the Bahamas over the past two years, official property records show.
The company, which has filed for U.S. bankruptcy court protection, owes over $3 billion to investors but had a total cash balance of $1.24 billion as of Nov. 20, according to a court filing on Monday.
The real estate splurge has raised questions over how and why they were bought, with most of the spending spree including luxury beachfront homes.
They include $72 million spent on apartments at a luxury Bahamas resorts, a $30 million penthouse in the same complex, a $16.4 million vacation home, and three apartments ranging between $950,000 and $2 million each.
$30 million: The former penthouse residence of Sam Bankman-Fried in the luxurious Albany development, which was 'meticulously designed with Venetian plaster walls matching Italian marble accents throughout,' its listing says
$72 million: The Albany Bahamas Resort community where FTX reportedly bought seven apartments for its employees, described in a listing as 'the ultimate in luxury waterfront living in the Caribbean'
$16 million: The entrance to Old Fort Bay, the exclusive gated community where the $16.4 million vacation home reportedly bought by FTX for for Bankman-Fried's parents is located
$2 million: View of the beachfront condominium complex ONE Cable Beach, where FTX reportedly bought three homes between $950,000 and $2 million each
Sam Bankman-Fried's parents, law professors Barbara Frieds and Joseph Bankman, are reported to have been bought a $16.4 million vacation home by their son with FTX funds
The biggest amount, a whopping $72 million, was spent on apartments for FTX workers at a swanky resort described as 'the ultimate in luxury waterfront living in the Caribbean' by listing agents, as well as a $30 million penthouse in the same complex for former CEO Bankman-Fried.
The exclusive Albany resort in the Bahamas overlooks white beaches and sees Tiger Woods host golf tournaments every year.
FTX has a total cash balance of $1.24 billion but owes over $3 billion, with a bankruptcy hearing describing its leadership as inexperienced, unsophisticated and potentially compromised.'
At the center of questions about the company's financial history are likely to be its portfolio of Bahamas properties acquired over the last two years, mostly made up of high-end residences.
They include $72 million spent on apartments at a luxury Bahamas resorts, a $30 million penthouse in the same complex, a $16.4 million vacation home, and three apartments ranging between $950,000 and $2 million each.
The collapse of FTX, once one of the world's largest cryptocurrency exchanges, has left an estimated 1 million creditors facing losses totaling billions of dollars.
Reuters has reported Bankman-Fried secretly used $10 billion in customer funds to prop up his trading business, and that at least $1 billion of those deposits had vanished.
A $16.4 million vacation home for Bankman-Fried's Stanford law professor parents was also bought by FTX, in the upmarket gated community of Old Fort Bay.
Documents for the $16.4 million home with beach access in the exclusive Old Fort Bay show Bankman-Fried's parents, Stanford University law professors Joseph Bankman and Barbara Fried, as signatories.
The property is for use as a 'vacation home,' one of the documents dated June 15 said.
When asked by Reuters why the couple decided to buy a vacation home in the Bahamas and how it was paid for, a spokesperson for the professors said only that Bankman and Fried had been trying to return the property to FTX.
'Since before the bankruptcy proceedings, Mr Bankman and Ms Fried have been seeking to return the deed to the company and are awaiting further instructions,' the spokesperson said, declining to elaborate.
While it is known that FTX and its employees bought real estate in the Bahamas, where it established its headquarters in September last year, the property records seen by Reuters show for the first time show the scale of their buying spree.
Other high-end real estate purchases include three condominiums at One Cable Beach, a beachfront residence in New Providence.
FTX founder Sam Bankman-Fried, whose former company amassed a multi-million-dollar property portfolio amid financial difficulties
Records showed the condominiums cost between $950,000 and $2 million and were bought by Nishad Singh, the former head of engineering at FTX, Gary Wang, an FTX co-founder, and Bankman-Fried for residential use.
Singh and Wang did not respond to requests for comment.
Two of FTX Property's real estate holdings were marked for commercial use - an $8.55 million cluster of houses that served as FTX's headquarters, and a 4.95-acre plot of land on the coastline overlooking cyan waters that was also meant to be developed into office space for the crypto exchange.
FTX's fall from grace has sent shivers through the crypto world, driving bitcoin to its lowest level in around two years and triggering fears of contagion among other firms already reeling from the collapse in the crypto market this year.
The company, which filed for bankruptcy earlier this month after a rush of customer withdrawals, did not respond to a request for comment. Bankman-Fried did not respond to requests for comment.
The discovery comes after it was recently revealed that US prosecutors had opened a probe into FTX months before it filed for bankruptcy, with both the company and Sam Bankman-Fried suspected of engaging in federal fraud.
Bankman-Fried has told Reuters he lived in a house with nine other colleagues. For his employees, he said FTX provided free meals and an 'in-house Uber-like' service around the island.
Boutique bistro Cocoplum, just yards from FTX's headquarters, told Fox News that Bankman-Fried spent $2,500 a day there on takeout deliveries, adding that he would spend an additional $7,500 a day elsewhere at other restaurants.
A view of the exclusive Albany Bahamas Resort community, where FTX is reported to have spent over $100 million on luxury homes
The Albany Bahamas Resort community, the location of several FTX employees' homes, has been described as 'the ultimate in luxury waterfront living in the Caribbean' by listing agents
FTX employees Nishad Singh (left) and Gary Wang purchased properties in the ONE Cable Beach complex for up to $2 million each, according tor ecords
Cryptocurrency exchange FTX has collapsed.
Here is a history of FTX since its foundation in 2019:
May - Former Wall Street trader Sam Bankman-Fried and ex-Google employee Gary Wang founded FTX, the owner and operator of FTX.COM cryptocurrency exchange.
August - FTX acquired mobile portfolio tracking application, Blockfolio for $150 million.
July - A $900 million funding round valued FTX at $18 billion.
September - FTX signed a sponsorship deal with Mercedes' Formula 1 team.
October - FTX raised capital at a valuation of $25 billion from investors including Singapore's Temasek and Tiger Global.
Jan. 27 - FTX's U.S. arm said it was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank and Temasek.
Jan. 31 - FTX raised $400 million from investors including SoftBank at a valuation of $32 billion.
Feb. 13 - Larry David stars in Super Bowl commercial for FTX
April 26 - April 29 - Bankman-Fried is joined by celebrities including Tom Brady, Katy Perry, Tony Blair and Bill Clinton and the Crypto Bahamas conference.
June 4 - FTX signed a reportedly $135 million sponsorship deal for naming rights of the Miami Heat's home court.
July 1 - FTX signed a deal with an option to buy embattled crypto lender BlockFi for up to $240 million.
July 22 - FTX offered a partial bailout of bankrupt crypto lender Voyager Digital. Voyager called it a 'low-ball bid'.
July 29 - FTX said it won full approval to operate its exchange and clearing house in Dubai.
Aug. 19 - A U.S. bank regulator ordered crypto exchange FTX to halt 'false and misleading' claims it had made about whether funds at the company are insured by the government.
Sept. 9 - FTX's venture capital fund said it would buy a 30% stake in SkyBridge Capital.
Nov. 2 - Crypto news website CoinDesk reported a leaked balance sheet that showed Alameda Research, Bankman-Fried's crypto trading firm, was heavily dependent on FTX's native token, FTT.
Nov. 6 - Binance CEO Changpeng Zhao said his firm would liquidate its holdings of FTT due to unspecified 'recent revelations'.
Nov. 7 - Bankman-Fried said 'FTX is fine. Assets are fine'.
Nov. 8 - FTT collapses by 72% as clients swamp the exchange with withdrawal requests. Binance offers a potential bailout in a non-binding deal.
Nov. 9 - Binance backs out of the rescue plan, saying: 'As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.'
Nov. 11 - Bankman-Fried resigns as CEO and FTX files for Chapter 11 bankruptcy
Nov. 13 Police in the Bahamas announce a team from its Financial Crimes Investigation Branch are investigating whether any criminal misconduct occurred.
Nov. 15 - Bankman-Fried continues to plead with investors for money to cover the firm's losses and tweets that he's 'meeting in-person with regulators and working with the teams to do what we can for customers'
The collapse of FTX, one of the world's largest crypto currency exchanges, has left an estimated 1 million creditors facing losses totalling billions of dollars.
The veteran financial expert brought in as the new CEO of the collapsed firm delivered a blistering verdict on the team running the company, saying their 'unprecedented' failures were more disastrous than those of Enron's bosses
John Ray III, the new FTX CEO, was brought in on November 11 after the 30-year-old founder Bankman-Fried was convinced by his lawyers and his father to step down.
'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,' Ray said.
'From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.'
Bankman-Fried was recently estimated to be worth $23 billion. His net worth has all but evaporated, according to Forbes and Bloomberg.
Ray explained why he had been brought in, and said his history of dealing with mismanagement had not prepared him for the shambles at FTX.
'I have over 40 years of legal and restructuring experience,' he said.
'I have been the Chief Restructuring Officer or Chief Executive Officer in several of the largest corporate failures in history.
'I have supervised situations involving novel financial structures (Enron and Residential Capital) and cross-border asset-recovery and maximization (Nortel and Overseas Shipholding).
'Nearly every situation in which I have been involved has been characterized by defects of some sort in internal controls, regulatory compliance, human resources and systems integrity.'
Ray said that FTX was by far the worst case he had come across.
Since his resignation, Bankman-Fried has sought out news outlets for interviews and has been active on Twitter trying to explain himself and the firm's failure.
In an interview with the online news outlet Vox, Bankman-Fried admitted that his previous calls for regulation of cryptocurrencies were mostly for public relations.
'Regulators, they make everything worse,' Bankman-Fried said, using an expletive for emphasis.
In a terse statement, Ray said that Bankman-Fried's statements have been 'erratic and misleading' and 'Bankman-Fried is not employed by the Debtors and does not speak for them.'
Ray noted that many of the companies in the FTX Group, particularly those in Antigua and the Bahamas, didn't have appropriate corporate governance and many had never held a board meeting.
Ray also addressed the use of corporate funds to pay for homes and other items for employees.
'In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors.
'I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas,' he said.
Reuters has reported Bankman-Fried secretly used $10 billion in customer funds to prop up his trading business, and that at least $1 billion of those deposits had vanished.
In a U.S. court filing with the District of Delaware bankruptcy court earlier this month, Ray said he understood that corporate funds of the FTX Group were used to 'purchase homes and other personal items for employees and advisors.'
Reuters could not determine the source of funds that FTX and its executives used to buy these properties.
Reuters searched property records at the Bahamas Registrar General's Department for FTX, Bankman-Fried, his parents and some of the company's key executives.
FTX Property Holdings Ltd, an FTX unit, bought 15 properties worth nearly $100 million in 2021 and 2022.
Its most expensive purchase was a $30 million penthouse at the Albany, a resort where Tiger Woods hosts a golf tournament every year.
The property records for the penthouse, dated March 17, were signed by Ryan Salame, the president of FTX Property, and showed it was intended as 'residence for key personnel.'
Salame did not respond to a request for comment.
The FTX headquarters is now unoccupied, with furniture pushed against some windows. Its signage has been removed. The plot of land, which cost $4.5 million, also lies empty.
A security guard said employees did not return to the headquarters after leaving earlier this month.
The 10 most damning revelations about FTX in its bankruptcy report - from $1B personal loan to Sam Bankman-Fried and payments signed off with EMOJIS to investor funds being used to buy homes for workers in the Bahamas
By LEWIS PENNOCK FOR DAILYMAIL.COM
'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,' writes John J. Ray III, the man appointed as CEO of cryptocurrency exchange platform FTX to guide it through its collapse.
And that's coming from a man who helped deal with the fallout from the Enron scandal, once the largest corporate bankruptcy in US history.
The observations he makes in bankruptcy filings for FTX are so damning that it's remarkable the company did not implode sooner.
Ray, who has 40 years of legal and restructuring experience, lists a litany of failures from 'inexperienced... potentially compromised' leadership to hiding misuse of customer funds and splurging company cash on houses in the Bahamas.
These are 10 of the most damning revelations included in the FTX bankruptcy filing:
At the height of his success, Sam Bankman-Fried was worth an estimated $26 billion. His reputation helped him secure the backing of celebrities including supermodel Gisele Bundchen. The filings show he was loaned a massive $1 billion by Alameda Research, the company he founded which was handed billions of dollars in FTX clients' money
FTX founder Sam Bankman-Fried meets Katy Perry, Bill Clinton, Tony Blair and the Prime Minister of the Bahamas, Philip Davis, at the Crypto Bahamas event organized by FTX
The filings reveal Sam Bankman-Fried was loaned $1 billion by Alameda Research. FTX co-founder Nishad Singh was loaned $543 million by Alameda.
That's suspicious because Alameda Research, a trading firm, was founded and owned by Bankman-Fried. Alameda is accused of secretly using billions of dollars of FTX client funds for risky investments which failed.
FTX is believed to have loaned about $10 billion worth of customer funds to Alameda. FTX collapsed when spooked clients rushed to withdraw their money and the firm couldn't pay out.
Bankman-Fried's on-off lover, Caroline Ellison, 28, was CEO of Alameda Research, which was loaned billions of dollars of FTX clients' cash to make risky investments . She had only 18 months of professional experience when she joined Alameda.
Nishad Singh co-founded FTX with Bankman-Fried. The bankruptcy filings say he was loaned $543 million by Alameda Research, the company founded and owned by Bankman-Fried. Alameda was loaned billions of dollars worth of client money by FTX.
FTX co-founder Gary Wang was one of Bankman-Fried's inner circle. The bankruptcy filing says the FTX group's leadership was 'inexperienced, unsophisticated and potentially compromised'
At its peak, FTX was worth $32 billion. The trading platform had about one million customers and processed trades worth nearly a billion dollars per day.
But this behemoth of the crypto sphere was controlled by 'a very small group of inexperienced, unsophisticated and potentially compromised individuals', Ray states in the bankruptcy filing.
Later in the document, he notes that Bankman-Fried and FTX co-founder Gary Wang 'controlled access to digital assets of the main businesses in the FTX Group'.
The integrity of its systems was compromised and there was 'faulty regulatory oversight abroad'.
Bankman-Fried and nine members of his inner circle, including his on-off lover Caroline Ellison, lived in a $40 million penthouse in the Bahamas. The filings detail how FTX's money was used to purchase homes in the Bahamas and other 'personal items' for employees
The swimming pool at Bankman-Fried's luxury penthouse. The penthouse is on a Bahamas resort part-owned by Tiger Woods and Justin Timberlake.
It's known Sam Bankman-Fried and his inner circle lived in a $40 million penthouse in the Bahamas, the Caribbean tax haven where FTX was headquartered.
And the bankruptcy filing raises questions about how the luxurious home - at a resort owned by individuals including Tiger Woods and Justin Timberlake - was paid for.
The bankruptcy filing explains that the company's corporate funds were used to buy several homes in the Bahamas. Money was also splurged on 'personal items' for staff and advisors.
Ray writes: 'In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors.
'I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas.'
FTX supervisors signed off payments with 'personalized emojis' in online chat platforms
International companies which handle transactions worth billions of dollars use strict protocols and procedures to keep everything above board.
Payments were signed by supervisors using 'personalized emojis' in an 'online 'chat' platform', the filing states.
Explaining the process in formal terms, Ray writes: 'The Debtors did not have the type of disbursement controls that I believe are appropriate for a business enterprise.
'For example, employees of the FTX Group submitted payment requests through an on-line 'chat' platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.'
He says the new leadership is now implementing proper payment approval processes.
At the heart of FTX's collapse is the clandestine use of clients' money to provide Alameda Research with loans worth billions of dollars.
The bankruptcy filing reveals 'the use of software to conceal the misuse of customer funds'.
The finding means staff within FTX intentionally misused client money then tried to cover their tracks.
The new leadership also found 'the secret exemption of Alameda from certain aspects of FTX.com's auto-liquidation protocol, and 'the absence of independent governance' between Alameda and other parts of the FTX group.
Alameda was owned 90% by Mr Bankman-Fried and 10% by Mr Wang, the document states.
Bankman-Fried was hailed as an unorthodox business genius. The teetotal vegan slept four hours a night, usually on a beanbag in his office. His reptuation has been shattered by the collapse of FTX - and the bankruptcy filing outlines the unbridled chaos within his company.
'One of the most pervasive failures of the FTX.com business in particular is the absence of lasting records of decision-making.'
Ray's blistering criticism of the record-keeping at FTX is damning.
He adds: 'Mr. Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time, and encouraged employees to do the same.'
In what can be perceived as a pointed criticism of the chaos, he adds simply: 'The Debtors are writing things down.'
He also explains how 'the FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets'.
Ray repeatedly says he does 'not have confidence' in the information and accounts provided to him.
Human resources within the FTX group of companies, including Alameda, is so chaotic that the experts brought in to manage the bankruptcy haven't even been able to draw up a complete list of who works there.
The bankruptcy filing explains: 'The FTX Group's approach to human resources combined employees of various entities and outside contractors, with unclear records and lines of responsibility.
'At this time, the Debtors have been unable to prepare a complete list of who worked for the FTX Group as of the Petition Date, or the terms of their employment.
'Repeated attempts to locate certain presumed employees to confirm their status have been unsuccessful to date.'
The assessment is yet more evidence of the chaotic and careless approach to important internal processes.
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John J. Ray III, the man appointed to guide FTX through its bankruptcy, has managed the fallout from from some of the largest corporate failures in history.
But even this veteran executive, who has over 40 years of legal and restructuring experience, has never seen 'such a complete failure of corporate controls'.
The newly-appointed CEO of FTX opened the bankruptcy proceedings with an assessment so damning that it is hard to comprehend how FTX was able to survive for as long as it did.
Ray, who played a key role in fighting the Enron scandal, said in the filing: 'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.'
Bankman-Fried recently claimed FTX.com held crypto tokens worth $5.5 billion.
The bankruptcy filing states the company's crypto assets are worth just $659,000.
In total, the team behind the bankruptcy process has unearthed only $740 million of cryptocurrency - 'only a fraction of the digital assets' they hoped to recover.
That crypto has been moved into 'cold wallets' that are more secure because they are held on platforms not connected to the interest.
The sum falls disastrously short of what was expected - and what is owed to investors.
Ray also notes that on the day bankruptcy was filed, at least $372 million of unauthorized crypto transfers were made out of the firm's accounts.
On the same day, an 'unauthorized source' also minted $300 million of FTT tokens, the digital token issued by FTX, similar to cryptocurrencies like bitcoin.
It raises the obvious question: Where on earth are the missing billions?
The lax approach to security processes is highlighted by FTX's use of an unsecured group email account to 'access confidential private keys and critically sensitive data for the FTX Group companies around the world'.
Ray explains: 'The FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets.'
He describes the use of unsecured emails as one of a series of 'unacceptable management practices'.
I wonder why he has not been arrested yet......
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