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User deposits were used for investments, real estate, political contributions and charity, the professor said
The Sam Bankman - Fried trial is 11 day in and witnesses proceed to take the stand on behalf of the criminal prosecution ’s case . The defamed former co - founder of FTX and Alameda is on trial for seven criminal electric charge related to dupery and money laundering .
On Wednesday , Peter Easton , an accounting prof at University of Notre Dame , testified regarding whether or not the FTX flop was predicate on fraud . Easton also assisted governing officials ’ pursuance of prior scandals like Enron and WorldCom .
Easton was hired by the U.S. Department of Justice to trace the billions of dollar bill that run between Alameda and FTX , many of which were customer investment trust . He provided analysis by tracking and compiling one thousand of pages of money box statement and interior documents from FTX . When prosecutors asked Easton if FTX ever spend user funds , he enunciate , “ oh , yes . ”
The deposits from FTX users were used by the exchange and its sister party Alameda Research for investments , substantial estate , political contribution and charity , Easton added .
Earlier this hebdomad , former senior FTX executive Nishad Singh testified along similar stemma . Singh said Bankman - Fried and other FTX executivesspent $ 8 billion Charles Frederick Worth of customer fundson real estate , speculation capital investment , campaign donations , countenance pot and even branding a sport stadium .
Singh , who has already pleaded guilty to fraud , money laundering and violation of campaign finance laws , said Monday that he read of the monumental hole in Alameda ’s Scripture as a outcome of a coding error that “ prevented the correct accounting ” of user deposits by around $ 8 billion . He also take the stand that Bankman - Fried was “ in general the one making the final decision on investments and investiture team decisions as a whole . ”
Former Alameda CEO Caroline Ellison explains how FTX hid losses , sandbagged lender
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Easton testify that in June 2022 , FTX only had $ 2 billion uncommitted for withdrawals even though about $ 11.3 billion had been wedge by users .
At the time , FTX spend $ 228 million on genuine estate and about $ 195 million on “ insider , ” or executives at FTX and Alameda , Easton testify . public prosecutor pull up charts tracking FTX client investment firm ’ inflows and outflows through various avenues . The government also showed evidence from fellowship Slack messages between Bankman - Fried and other employees indicating that they knew where monetary resource were coming from and being allocate to .
The Bahamas - based hedge stock Modulo Capital , co - founded by one of Bankman - Fried ’s exes — Xiaoyun “ Lily ” Zhang — received over $ 400 million in Washington from Alameda that was source from FTX customer monetary resource , Easton testified . During cross - examination , he stated that he decipher Modulo ’s investment through the FTX database .
While the Modulo investment was a whopping amount , it was n’t the only such transaction that used client investment company — Easton testified that his investigation into FTX and Alameda chance that client monetary fund were used for a legal age of FTX ’s investment into companies like Celsius , Anchorage , Anthony Scaramucci ’s SkyBridge Capital as well as bitcoin mining company Genesis Digital Assets .
While some capital deployment were in full fund by customer funds , other investments only had “ some ” customer cash in hand , Easton said . The note does short to shake the picture of fraud that the government is craft .
