Peter Easton, an accounting professor at the University of Notre Dame, testified on Wednesday that FTX customer deposits were reinvested in business and real estate and used for political donations and charitable contributions. It is reported that Easton was hired by the U.S. Department of Justice to track billions of dollars in funds from Alameda and FTX.
Easton said that around March 2021, total customer deposits fell below FTX's bank balance, meaning that customer funds had lost support by then. By June 2022, when FTX deposits peaked, the exchange had only about $2 billion on hand to support $11.3 billion in customer deposits, leaving a funding gap of $9 billion.
Easton said it can therefore be concluded that its acquisition of Modulo Capital was completed using customer funds. Modulo Capital is a Bahamas-based financial company owned by FTX. Easton's investigation also showed that most of FTX's investment in SkyBridge Capital was completed using customer funds. At the same time, most of the funds for FTX's $550 million investment in bitcoin mining company Genesis Digital Assets also came from customer deposits. In addition, FTX customer funds also flowed into a bank account of Paper Bird, Inc., an entity solely owned by SBF. "Most" of the $100 million invested by SBF in mobile banking platform Dave, Inc. through Paper Bird came from FTX customer deposits. (CoinDesk) #zachxbt
