Untangling the knotty empire of Bankman-Fried and FTX

With crypto exchange FTX short $8bn and hurtling towards bankruptcy, please take a moment to survey the task that might be awaiting liquidators and law enforcement agencies.

Below we reproduce two slightly different attempts to map FTX’s corporate structure as of March 2022. (H/T Dan McCrum.)

(Enlarge)

(Zoom)

(Crude spot-the-difference video)

There’s a lot going on there so the most we can do in a hurry is to pick out a few landmarks. Please feel free to add your own observations in the comment box.

FTX Trading Ltd, incorporated in Antigua and Barbuda, is the foundation company identified in FTX’s legal disclaimers. West Realm Shires Inc is the US-facing offshoot, commonly referred to as FTX US, which was excluded from Binance’s quickly-abandoned rescue proposal. The US company appeared to be Delaware ringfenced beyond its intellectual property relationships (with BVI-based Alameda Research Ltd and Cottonwood Grove Ltd of Hong Kong) while the remainder was a multijurisdictional web of wholly owned subsidiaries and inter-company loans.

The schematic also indicates that FTX Ventures Ltd, the group’s Bahamas-incorporated VC fund, was wholly owned by a little known Delaware holding company Paper Bird Inc, which in turn was wholly owned by Sam Bankman-Fried. Paper Bird also appears to have owned 89 per cent of FTX Trading Ltd as well as having intercompany loans with Alameda vehicles.

The US- and Cayman Islands-based LedgerPrime entities, in the bottom-left of the schematics, stem from FTX’s acquisition last year of hedge fund Ledger Holdings. FTX rebranded LedgerPrime’s crypto futures platform as FTX US Derivatives LLC and said the remaining business would become a family office making investments solely for Alameda Research.

Salameda Ltd (Hong Kong), owned 100 per cent by Bankman-Fried’s chief of staff Jen Chan, gives the appearance of being a group outrider with links to Alameda and FTX US entities by service agreements.

Because of the piecemeal nature of public disclosures we can’t guarantee that the above diagrams accurately represent FTX’s current or historic structure. A complete picture might only emerge from the examiner’s report in Chapter 11 proceedings, which in the case of Lehman Brothers took 18 months to deliver.

The SEC’s post-mortem diagram of Lehman’s corporate structure looks a model of simplicity in comparison . . .

…so we could be in for a very long wait.