An FTX Australia director tried to withdraw $800,000 of his own money from the cryptocurrency exchange in the week that the company’s parent collapsed after failing to stem an $US8 billion ($12 billion) run on funds.
The attempted withdrawal by Jamie Kennedy is detailed in a creditors report published by KordaMentha this week. The collapse of FTX, once one of the world’s largest exchanges, has ultimately sent its founder, Sam Bankman-Fried, to prison.
Mr Kennedy worked in FTX’s Sydney office. He attempted to pull his holdings from FTX on November 9, according to the creditor’s report. But, like thousands of Australians who were unable to withdraw their deposits from the platform, Mr Kennedy’s requests were not processed, and he joined the list of creditors.
FTX collapsed on November 12. Since then, KordaMentha has clawed back $40 million from two local entities – FTX Australia and FTX Express – which appears enough to pay back the 747 eligible creditors in full.
Chris Chen, another local director, did not have any funds on the FTX platform. The third director of FTX Australia was Mr Bankman-Fried, the chief executive of FTX Global. He has been found guilty of seven counts of fraud and stealing from customers.
Neither Mr Kennedy nor any other Australian director has been accused of wrongdoing.
Mr Bankman-Fried is currently in a New York jail awaiting sentencing. Prosecutors are pushing for a 100-year sentence, while Mr Bankman-Fried’s lawyers have argued he should only be in prison for six years. Despite the billions of dollars that appeared to be lost, administrators of the global bankruptcy case have also said they will be able to pay back the millions of customers who lost their funds in the collapse.
Because the value of cryptocurrencies has soared, the value of the recovered FTX assets will be enough to cover the claims in US dollar terms, the administrators have said.
In Australia, KordaMentha has untangled the relationship between FTX Australia and the parent company. Throughout 2022, FTX Trading tipped nearly $3.5 million into the local operations.
FTX was allowed to operate in Australia after it spent $300,000 to purchase Hive Empire Trading, an exchange owned by Finder co-founders Fred Schebesta and Frank Restuccia, in 2018. This entity was registered with AUSTRAC to operate as an exchange in Australia.
This acquisition was made by Alameda Research, the hedge fund run by Mr Bankman-Fried’s then-girlfriend Caroline Ellison. The trial of Mr Bankman-Fried revealed customer money from the FTX platform was used to plug trading holes on the Alameda Research balance sheet. FTX Australia was able to offer derivative trading products thanks to a financial services license belonging to IFS Markets, another acquisition made by FTX in 2019. Mr Chen was appointed a director of this entity in 2020.
Mr Kennedy was appointed as a director of both FTX Australia and FTX Express in March 2022. He now works at OKX, a crypto exchange registered in the Seychelles.
Mr Kennedy did not respond to a request for comment.