A recent bankruptcy report from the now-defunct cryptocurrency exchange FTX reveals that the exchange loaned slightly more than $13 million to Australian influencer Alex Saunders. This loan was intended to help Saunders repay investors and protect FTX’s reputation from potential harm and litigation.
Bankruptcy Report Contradicts Saunders’ Assertions
The bankruptcy report claims that Saunders received a $13.2 million (AUD$17.5 million) loan from FTX in July 2021 to settle his debts with creditors. This revelation contradicts Saunders’ previous statements, in which he asserted that he had raised approximately $11 million from retail investors, friends, and family. Saunders had reportedly assured his backers that the funds would be used to develop cryptocurrency protocols. However, he allegedly diverted a significant portion of the money to FTX, where he squandered it trading on FTX.com.
Examiner Robert J. Cleary’s report indicates that some investors initiated lawsuits against Saunders due to the mishandling of their funds. To avoid reputational damage and potential litigation, FTX offered Saunders a multimillion-dollar loan. Despite Saunders’ claims of having met his financial obligations, the bankruptcy report states that he has not repaid the loan. Saunders, who has resumed promoting cryptocurrencies, has not addressed the issue since his April 2022 statement.
FTX’s Australian Acquisitions
Examiner Cleary’s report also sheds light on the involvement of an Australian law firm, referred to as Law Firm-5. This firm assisted in negotiating and arranging Saunders’ loan and allegedly acquired fintech businesses on behalf of FTX. These acquisitions allowed FTX to bypass the standard procedure for obtaining an Australian financial services license.
The report further alleges that an unnamed partner at the law firm received $727,402 for facilitating these acquisitions. Despite efforts to secure the firm’s cooperation, including Bankruptcy Rule 2004 requests served by Quinn Emanuel, the firm has refused to produce the requested documents.
