Bankrupt cryptocurrency exchange FTX used customer funds to buy back all of the company’s shares held by rival Binance, a court hearing on Wednesday revealed.
Binance CEO Changpeng Zhao said in a 2022 post the company received more than $2.1 billion in FTX stablecoin BUSD and FTT tokens as part of the acquisition .
Peter Easton, an accounting professor at the University of Notre Dame, has been hired by the US Department of Justice (DOJ) to trace billions of dollars between Alameda and FTX as part of the ongoing Sam Bankman-Fried trial .
“Yes,” Easton replied when asked by the court whether FTX ever spent user deposits. The professor testified that these user deposits were reinvested in businesses and real estate, used for political contributions, and donated to charity.
This deposit was also used to buy back Binance shares at FTX.
“What about buying back shares from Binance? More than $1 billion came from FTX exchange customer funds,” Easton testified Wednesday.
In 2019, Binance invested an undisclosed amount in FTX as part of a strategic partnership between the two companies. The fledgling FTX was then processing $500 million a day in transactions, a far cry from the more than $50 billion at its peak.
However, the relationship between the two sides gradually deteriorated over the years, even spreading to social networks.
