By Evan Spicer
Director of Cryptocurrency Investigations
MyChargeBack
The term “follow the money” was the motto of Bob Woodward and Carl Bernstein in the Watergate scandal. It’s also an effective mantra in the scam recovery process. The FTX crypto scam scandal has raised many questions. Perhaps the most pertinent, especially for FTX scam victims – Where did the money go?
With less well-publicized bitcoin scams, the funds often go to shell companies or are laundered through accomplices and mules on the blockchain. It can be a challenge to track down the identities of the people running the crypto scam as well as the recipients of the laundered money.
The Blessing of Transparency in the FTX Collapse
Fortunately, following the FTX collapse, it’s very clear who has the lion’s share of the funds – FTX founder Sam Bankman–Fried. He shuffled the money between various entities which he either owned outright or in which he held a huge stake. There isn’t much of a need to unmask owners of anonymous bitcoin wallets in the case of the FTX collapse, however, it’s clear that fund recovery is going to be a challenge.
Even though the funds didn’t take a circuitous route through the blockchain and pass anonymously through many hands, it’s hard to know exactly how FTX crypto scam victims are going to experience full scam recovery if the money slipped through Sam Bankman-Fried’s fingers.
Although he is being extradited from the Bahamas and will likely stand trial for running a crypto scam, figuring out how he spent the money, whether he hid it and liquidating assets to pay back scam victims is likely to be a long, complicated process, and as in many other scam recovery cases, is unlikely to reward every single claim.
That’s why in cases like the FTX collapse it’s important to make your claim stand out from the rest. Full scam recovery can’t be guaranteed, but your chances of fund recovery are increased working with MyChargeBack professionals. We consult with clients, launch a full crypto investigation and create crypto reports that can strengthen your fund recovery claim.
Where Did Money from the FTX Crypto Scam Go?
One thing that is clear about the FTX collapse is that the company’s financial records are messy or non-existent. It’s clear that Sam Bankman-Fried and those who worked with him weren’t that interested in keeping the books organized, and maybe there was a good reason for that — incomplete and sketchy financial records provided a fig leaf for financial crime and incompetence.
However, from the FTX bankruptcy filings and investigations, it’s clear that Sam Bankman-Fried has four main silos for the funds: FTX.com, Alameda, West Realm Shires, and venture investments.
FTX.com
The most well-known of all of these silos for the FTX crypto scam was FTX.com. The parent company that owned FTX.com was FTX Trading, which was 75% owned by Sam Bankman-Fried and 25% owned by third party investors.
In addition to the website FTX.com, FTX Trading has a number of real estate properties in the Bahamas and other places. It’s clear that Sam Bankman-Fried and a few friends and associates improperly used FTX.com funds to purchase these properties and other luxuries.
Alameda
Alameda is another component of Bankman-Fried’s crypto scam and promised clients crypto trading. Instead, Bankman-Fried and his associates leveraged customer funds from FTX to make high-risk investments. When these investments failed, Bankman-Fried was unable to fund customer withdrawals or pay off its debts to BlockFi, which sued the company.
Sam Bankman-Fried co-founded Alameda with Tara Mac Aulay who backed out in 2018 because she felt Alameda was a crypto scam that was improperly using funds. After Mac Aulay’s departure, Bankman-Fried owned a 90% stake in Alameda. The fund owned cryptocurrencies, crypto ETFs, digital assets and treasuries, and also made individual investments.
West Realm Shires (WRS)
Under the name of West Realm Shires, FTX bought, sold and traded assets. Sam Bankman-Fried owned 53% of WRS, partners Gary Wang and Nishad Singh owned 17% and 8% respectively and third party owners held 22% of the company.
WRS purchased a regulated crypto platform Ledger X and rebranded it as FTX Derivatives. WRS also owns Embed Clearing and FTX Gaming.
Venture Investments
Sam Bankman-Fried owns 100% of the venture investments silo, and he held stakes in Anthropic, Sequoia Capital, Mysten Labs and other companies.
How Likely Is Fund Recovery from the FTX Crypto Scam?
Although there have been some rather grim statements in media reports regarding the possibility of fund recovery from the FTX crypto scam, victims of this fraud have two advantages over those who have lost money from typical crypto scams.
First, Sam Bankman-Fried and the FTX collapse are all over the headlines. They are a known quantity. This isn’t a mysterious owner of a crypto scam that disappeared in the night and laundered money through many bitcoin wallets. Instead, Bankman-Fried is now as recognizable and infamous as Bernie Madoff, and authorities know who has taken the money.
Second, the FTX collapse and the case of this crypto scam is being investigated by authorities. It’s unlikely that a fly-by-night crypto scam will get the kind of attention the FBX collapse has. At least FBX fraud victims know who took their money and can read about progress in the case.
Third, it’s clear that Sam Bankman-Fried and a few cronies who can be identified have the lion’s share of the money. It’s no mystery who was responsible for taking the money, how, and where it ended up.
However, once Sam Bankman-Fried burned through all of this money, fund recovery is a challenge. His assets, such as luxury homes and real estate can be liquidated, but since many were crypto assets, the value lost can’t be regained.
With the FTX collapse as with other crypto scams, you can improve your chances of fund recovery with MyChargeBack on your side to bolster your claim with investigations and crypto reports. Your claim will stand out from the rest and get the attention it deserves.
Have You Lost Money to Crypto Scam FTX? Talk to MyChargeBack Professionals Today
If you have lost money to financial fraud, talk to the MyChargeBack team. Our investigations will provide evidence to bolster your claim. Our crypto investigation reports are essential for tracking down your funds on the blockchain and getting your started on the road to fund recovery.
