Sam Bankman-Fried Spent FTX Funds on Fancy Real Estate, Donations — and Himself: SEC

Scandal-plagued FTX mogul Sam Bankman-Fried siphoned billions of dollars from the cryptocurrency company to spend on swanky real estate, personal needs for himself and others, and countless political donations, federal documents show.

“It’s taking money away from customers,” New FTX CEO John Ray told Congress during a scathing review of the company he acquired from Bankman-Fried. “and to use them for our own ends.”

Bankman-Fried was arrested in the Bahamas on Monday and faces federal charges in the US weeks after FTX filed for bankruptcy.

FTX’s funds included more than $8 billion, according to the SEC complaint, which went to related trading firm Alameda Research, which Bankman-Fried founded in 2017 and co-led with Caroline Ellison. Between $1 billion and $2 billion of those funds are missing, Reuters reported.

The funds transferred from FTX to hedge fund Alameda were used not only for Alameda’s proprietary trading, but also to fund loans to Bankman Fried and other FTX executives, the SEC said.

Bankman-Fried, 30, gave himself $1.338 billion in personal loans, according to the SEC.

“Between March 2020 and September 2022, Bankman-Fried executed promissory notes on loans from Alameda totaling more than $1.338 billion,” the SEC said. “including two instances in which Bankman-Fried was both the borrower in his individual capacity and the lender in his capacity as CEO of Alameda.”

Another $300 million from FTX along with Alameda was allocated to luxury properties in the Bahamas in a bankruptcy filing, according to company lawyers. The property purchases went to him, his parents and other FTX executives, the SEC said.

The SEC claimed the loans to Bankman-Fried and others were “poorly documented and at times not documented at all.” Records of buying and owning real estate are also “poorly organized and documented”.

“Neither the fact of the borrowings and purchases nor the tenuous documentation of material liabilities and expenses of the company have been disclosed to investors,” the SEC said.

And Bankman-Fried and other company bosses even had some money left over for politics. Political donations tied to Bankman-Fried and other FTX executives like Ryan Salame and Nishad Singh pumped about $73 million into political candidates and causes, according to Bloomberg.

Withdrawal of campaign funds through bankruptcy proceedings can be a complex and lengthy process that depends on multiple federal and state laws, according to the Bloomberg report.

Bankman-Fried was the second largest single donor to the Democrats, after billionaire businessman George Soros.