At Least $1 Billion In Client Funds Disappearing At Bahamas-Based Crypto Exchange FTP extensionaccording to the news.

Two people familiar with the matter tell Reuters that the founder of FTX Sam Bankman-Fried “secretly” transferred $10 billion of client funds from the cryptocurrency exchange to his own trading company, Research Alameda.

One source said about $1.7 billion of that amount is missing, while the other said the missing funds amount to between $1 and $2 billion, according to the newswire.

The sources — who held senior positions at FTX until last week and said they were briefed on the company’s finances by senior staff — say the gap emerged a week ago in documents Bankman-Fried shared with other senior executives, writes Reuters.

Several spreadsheets shown to the heads of the company’s regulatory and legal teams revealed the transfer of $10 billion — the size of the FTX loans to Alameda — and what it was used for, the sources told the newswire.

The spreadsheets indicated between $1 billion and $2 billion were not accounted for in Alameda’s assets and didn’t show where the money had moved, the sources said, adding they didn’t even know what happened, according to Reuters.

The sources say that in subsequent investigations, FTX’s legal and finance teams discovered that Bankman-Fried had implemented a “backdoor” into the firm’s accounting, allowing him to “execute commands that could alter the firm’s financial records without alerting other people, including external reviewers,” the newswire writes.

FTX and Alameda did not respond to Reuters requests for comment.

Bankman-Fried, via text messages to the newswire, denied implementing the backdoor and said he “disagreeed with the characterization” of the transfer.

“We didn’t move secretly,” she said. “We had confusing internal labeling and misinterpreted it,” she added, without elaborating, according to Reuters.

When asked on the news about the missing funds, the Bankman-Fried replied with a text message: “???”

FTX, which was valued at $32.5 billion earlier this year, filed for bankruptcy on Friday. Bankman-Fried also stepped down as chief executive officer and succeeded him John Ray IIIthe company said in a statement posted to Twitter on Friday.

Bankman-Fried had previously told investors that the exchange needed an injection of cash to survive. A potential takeover of FTX by another exchange, Binanzait collapsed rapidly last week.

FTX is also facing an investigation by US regulators, with the Department of Justice probing how the exchange handled client funds and its relationships with other Bankman-Fried subsidiaries, including Alameda.

JP Morgan analysts said last week that the interconnection between FTX, Alameda and other players in the crypto space could result in a “cascade of margin calls”.

The collapse of FTX will also affect many investors, ranging from Ontario Teachers Retirement Plan to Black rock and celebrities like Tom Brady And Gisele Bunchen.

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