A court hearing on Wednesday revealed that the bankrupt cryptocurrency exchange FTX had repurchased all of the firm’s shares, which were held by rival platform Binance, using monies from its clients.
Binance’s CEO, Changpeng Zhao, revealed in a post from 2022 that the repurchase comprised the acquisition of FTX’s FTT tokens as well as roughly $2.1 billion in Binance USD (BUSD) stablecoins.
As part of the ongoing Sam Bankman-Fried trial, the US Department of Justice (DOJ) employed Peter Easton, an accounting professor at the University of Notre Dame, to trace the billions of dollars between Alameda and FTX.
When the court asked Easton if FTX had ever spent user deposits, he replied, “Oh, yes.” According to the professor’s evidence, these user deposits were allegedly donated to charities, invested in real estate and business, and used to fund political campaigns.
These deposits were used to repurchase Binance’s share of FTX. “Over a billion dollars came from customer funds from the FTX exchange,” Easton testified Wednesday.
Binance made an undisclosed financial investment in FTX in 2019 as part of a strategic agreement between the two companies. Trading volume on the then-new FTX was $500 million per day, a far cry from the high of nearly $50 billion.
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