According to a recent Wall Street Journal report, FTX used customers’ deposits to bail out its subsidiary firm Alameda from the stalemate it was in. The report tells us that Alameda owes FTX 10 billion dollars. Users who invested in the FTX exchange had a total deposit of 16 billion dollars on the platform. However, since $10 billion of it was sent to Alameda, investors could only withdraw 6 billion dollars on Sunday and Monday.
The information received yesterday says that the total deficit is around 8 billion dollars. Binance analyzed FTX’s data and realized that it would make a deal not worth covering the 8 billion dollars customer deposit gap. Then, Binance broke the deal.
FTX saw itself as a bank for Alameda Research and entrusted customer deposits to Alameda for invest in risky assets without permission. Alameda probably felt the need to lick its wounds as the rest of the cryptocurrency markets oversold during the LUNA crash. Since SBF is the official owner of both these companies, itreluctantly entrusted customer deposits to Alameda, aiming to save the firm.