FTX Loaned Millions to Australian Influencer to Ward Off Potential Litigation, Bankruptcy Report Reveals

tamir
Mon, 10 Jun 2024 08:25:17 +0000
Australia, Bankruptcies, Crypto Schemes, United States, Alex Sauners, FTX

A recent bankruptcy report from collapsed crypto exchange FTX has unveiled another incredible story. The now-defunct cryptocurrency exchange extended a loan of over $13 million to Australian influencer Alex Saunders. The loan was intended to help Saunders repay investors and protect FTX‘s reputation from potential litigation. Bitcoin.com News first brought this story to light. The FTX bankruptcy case seems to produce a neverending stream of stories.

Bankruptcy Report Contradicts Saunders’ Previous Assertions

The report indicates that in July 2021, Saunders received a $13.2 million (AUD$17.5 million) loan from FTX. This significant sum was purportedly to settle his debts with creditors. This disclosure starkly contrasts Saunders’ previous claims that he had independently raised around $11 million from retail investors, friends, and family. These funds were reportedly transferred to cryptocurrency wallets under his control, with assurances to his backers that they would be used to develop new crypto protocols. Contrary to these promises, Saunders allegedly transferred a considerable portion of the funds raised to FTX and misused them for trading on FTX.

Investor Lawsuits and FTX’s Strategic Loan

As investors began to pursue legal action due to Saunders’ misuse of their funds, FTX reportedly stepped in to offer the multimillion-dollar loan. This move was aimed at mitigating any reputational damage and avoiding further litigation against FTX. Despite Saunders’ earlier claims of having settled his financial obligations, the bankruptcy report reveals that he has yet to repay the loan from FTX. Since his last statement in April 2022, Saunders has resumed promoting cryptocurrencies but has not addressed the outstanding loan issue.

FTX’s Australian Acquisitions and Legal Complications

The examiner, Robert J. Cleary, also highlighted the role of an Australian law firm in the negotiations and arrangement of Saunders’ loan. The firm is alleged to have facilitated acquisitions of fintech businesses on behalf of FTX, which enabled the exchange to bypass the conventional process for securing an Australian financial services license. The examiner’s report further reveals that an unnamed partner at the law firm received $727,402 for their role in these acquisitions. Efforts to obtain cooperation from the law firm have reportedly been met with resistance.

These revelations add another layer of complexity to the ongoing saga of FTX’s bankruptcy and underline the intricate and often controversial relationships between cryptocurrency exchanges, influencers, and legal entities. As the investigation continues, the full extent of FTX’s dealings and the ramifications for those involved remain to be seen.