Accounting Prof Testified That SBF Mismanaged FTX Customers_ Funds I Tokenhell

In the recent development in the ongoing criminal trial of the former FTX exchange CEO, Sam Bankman-Fried (SBF), Peter Easton, an accounting professor at the University of Notre Dame, has mounted the witness box, testifying that SBF indeed mismanaged customers’ funds using it to sponsor personal projects and investments.

According to the report, in pursuit of victory in their lawsuit against SBF for allegedly committing an epic multi-billion-dollar fraud, the prosecution team has summoned Professor Peter Easton to testify against the defendant in the ongoing trial. The report showed that the professor had earlier aided the government in investigating Enron and WorldCom organizations a couple of decades ago.

Furthermore, the Notre Dame accounting expert reportedly assumed the witness box on Wednesday, where he was asked if FTX spent its clients’ deposits. Prof Easton replied to the court positively, confirming that the crypto exchange spent vast amounts of customers’ money for personal investment activities.

Easton Claimed FTX Mismanaged Users’ Money

Easton added that FTX reinvested customers’ deposits, using the profits to sponsor its charity and political donations. And to Back up his claims, the professor revealed a chart that showed a considerable difference in the amount of money FTX users deposited and the remaining balance in the exchange’s account.

With the aid of the chart, Prof Easton deduced that the bank balances of FTX started falling short of the total deposits customers made as early as March 2021. Also, he pointed out that as of June 2022 when the firm recorded its peak deposits, it only had about $2 billion available to back up more than $11 billion in customers’ deposits.

In addition, the professor used the chart to track outflows and inflows of FTX users’ money into several business investments. He pointed out that the firm used customers’ money to buy Modulo Capital, a financial company based in the Bahamas, which SBF owns. Also, he highlighted that most of the investment FTX made into SkyBridge Capital was funded by the customer’s money.

Katz Testified In The Ongoing SBF Trial

Also, he claimed that Genesis Digital Assets, a BTC mining site, also received a portion of FTX’s customers’ funds worth $550 million through investment. Professor Easton also deduced from the chart that SBF moved some customers funds from the FTX account to Paper Bird, InC., a financial firm owned by FTX. Also, the professor claimed that SBF used the funds siphoned into Paper Bird’s account to make a $100 million investment into Dave Inc

Additionally, Eliora Katz, the former lobbyist at FTX exchange, reportedly entered the witness box to testify about his knowledge concerning FTX’s claims of solid consumer protection and the poor security reality that led to the firm’s failure last year. The report revealed that Bankman-Fried had earlier testified before the House Financial Services Panel that FTX has a transparent operational . He added that they possessed an advanced risk-monitoring .

FTX Failed To Protect Consumers’ Funds

However, these claims were countered by the prosecution team, alongside the firm’s top utives who had earlier testified and pleaded guilty of the allegations. They claimed that the firm had a poor financial accounting and illicit ways of mismanaging customers’ funds for personal ambitions through its kinsmen. Watson claimed that these acts contributed to the failure of the firm.

According to the report, Katz had little to say in the box as the prosecutor was merely showing him transaction receipts, tweets and screenshots, asking her to confirm their questions with either no or yes. Katz’s primary concern was to testify to FTX’s promises to protect users’ funds and interests but eventually filed as many lost their investments. She was also summoned to comment on crypto as commodities rather than securities.

The report revealed that Katz maintained her stance that the testimony of SBF before the House panel took place before she started working at FTX, denying that she was responsible for preparing the different materials FTX published about customers’ protection prior to its collapse.

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