TechFlow reported on October 19 that, according to CoinDesk, Peter Easton, an accounting professor at the University of Notre Dame, testified in court on Wednesday morning, stating that FTX customer deposits were reinvested into businesses and real estate, and used for political and charitable donations. Easton was hired by the U.S. Department of Justice to trace billions of dollars in funds from Alameda and FTX. Easton said that around March 2021, total customer deposits had already fallen below FTX's bank balance, meaning customer funds were no longer fully backed. By June 2022, when FTX deposits peaked, the exchange held only about $2 billion in cash to back over $11 billion in customer deposits, leaving a funding shortfall of $9 billion.
Easton stated that as a result, it can be concluded that the entire acquisition of Modulo Capital was funded with customer money. Modulo Capital is a Bahamas-based financial firm under FTX. Easton’s investigation also showed that most of FTX’s investments in SkyBridge Capital were made using customer funds. Meanwhile, the majority of FTX’s $550 million investment in bitcoin mining company Genesis Digital Assets also came from customer deposits. In addition, FTX customer funds flowed into a bank account belonging to Paper Bird, Inc., an entity solely owned by SBF. The "majority" of SBF’s $100 million investment through Paper Bird into the mobile banking platform Dave, Inc. originated from FTX customers.
Furthermore, Easton conducted a comprehensive analysis of thousands of pages of bank statements and internal FTX data. The results showed that by June 2022, SBF had spent $228 million of customer funds on real estate, including a $16.4 million Bahamas property purchased for his parents. Additionally, $195.2 million was transferred to "insiders," referring to executives of FTX and Alameda.
