According to a bankruptcy report from FTX, the defunct cryptocurrency exchange loaned an Australian influencer slightly more than $13 million. This loan was intended to assist him in repaying investors. The exchange proposed lending Saunders millions of dollars to prevent potential harm to its reputation and avoid litigation.
FTX Loaned Millions to Australian Influencer to Ward Off Potential Litigation, Bankruptcy Report Reveals
This article was published more than a year ago. Some information may no longer be current.
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Bankruptcy Report Contradicts Saunders’ Previous Assertions
The collapsed cryptocurrency exchange FTX’s bankruptcy report alleges that the Australian influencer Alex Saunders received a $13.2 million (AUD$17.5 million) loan from the exchange in July 2021. The advance was reportedly to enable Saunders to settle debts with creditors.
This report contradicts Saunders’ previous assertions that he had raised a large chunk of the funds — approximately $11 million — from retail investors, friends, and family. The funds were transferred to cryptocurrency wallets under his control. At the time, Saunders allegedly informed his backers that the money would be used to develop crypto protocols. However, he allegedly reneged on his promise after transferring a significant amount of the funds to FTX.
According to a report by examiner Robert J. Cleary, Saunders squandered the creditors’ money trading on FTX.com, leading some investors to initiate lawsuits. To avert potential damage to its reputation and avoid litigation, FTX reportedly offered to lend Saunders millions of dollars.
Although Saunders previously claimed to have fulfilled his financial commitments, he has not repaid the loan, the bankruptcy report indicates. Saunders, who has resumed promoting cryptocurrencies, has reportedly not addressed the issue since his April 2022 statement.
FTX’s Australian Acquisitions
Meanwhile, Examiner Cleary’s report also touched on the identity of the Australian law firm, referred to as Law Firm-5. Besides assisting in the negotiation and arrangement of Saunders’ loan, the law firm is alleged to have acquired fintech businesses on behalf of FTX. These acquisitions allowed FTX to circumvent the standard procedure for obtaining an Australian financial services license, the report said.
Furthermore, the examiner’s report contends that an unnamed partner at the law firm received $727,402 for facilitating the acquisitions. It added that attempts to secure the firm’s cooperation have been unsuccessful.
“Quinn Emanuel served Bankruptcy Rule 2004 requests on Law Firm-5 … but the firm refused to produce documents,” Cleary’s report states.
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