Ever since the ill-fated crypto Exchange FTX imploded last year, evidence has been building of rampant criminal activity on the part of the firm’s top executives. A new Report on the company’s finances published Monday does nothing to dispel that notion, revealing instead new allegations about how the failed exchange misspent billions in customer funds, splurging on everything from personal property to illegal political contributions. The report, put together by the exchange’s new CEO and top restructuring officer, John J. Ray III, alleges widespread illegality and criminal behavior on behalf of the company’s former head honcho, Sam Bankman-Fried, as well as FTX’s other top executives. It also reveals new details about how SBF allegedly worked with a company lawyer in an attempt to hide evidence of the firm’s financial misdoings. Here are some of the key takeaways from the new report.The newest report focuses on FTX’s “commingling of funds”—a fancy term for the fact that exchange executives don’t seem to have meaningfully distinguished between money deposited by customers and their own money. To hear investigators tell it, SBF and his top lieutenants treated the company like their own personal piggybank, pilfering customer accounts for their own various expenditures and personal investments. This apparently went on until billions and billions of dollars had been misappropriated—approximately $8.7 billion, according to the report. Part of the reason that FTX was able to get away with this for so long is that, until its collapse, the exchange was considered quite trustworthy. And the reason that it was considered trustworthy is because exchange executives convincingly leveraged ongoing PR efforts to make themselves seem like they were careful stewards of customers’ finances (instead of craven crypto bandits with the scruples of Caligula). Per the report...The FTX Group portrayed itself as the vanguard of customer protection efforts in the crypto industry. Its co-founder and CEO, Sam Bankman-Fried, claimed to support federal legislation to safeguard consumers’ digital assets, and touted the FTX exchanges’ purported procedures to protect fiat currency and crypto deposits, including in testimony he provided to the U.S. Senate......The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage. In fact, as set forth in this report, from the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon. What were FTX execs using customers’ money for? According to the report, the answer is: pretty much anything and everything. The report notes that “speculative trading, venture investments, and the purchase of luxury properties, as well as for political and other donations designed to enhance their own power and influence” were all things that FTX execs appear to have splurged on. In the meantime, company insiders kept telling anyone who would listen that they were really a paragon of fiscal ethics. Some of the excerpts from this section are laugh out loud funny. One particular anecdote reveals that as the floor started to drop out from under the crypto exchange, SBF apparently kept telling the public that everything was fine. The report notes...On November 7, 2022—months after discussing internally that over $8 billion in fiat currency alone was missing from the FTX exchanges, and four days before the FTX Group filed its bankruptcy petition—Bankman-Fried tweeted that “[w]e have a long history of safeguarding client assets, and that remains true today.”Christ, can we get Adam McKay and some of his hilarious colleagues together for a comedic but incisive adaptation of this whole thing already? The report notes that it extremely difficult to figure out just what the fuck happened to FTX customers’ money because of how ridiculous the exchange’s financial practices were. Indeed, the report notes that...Notwithstanding extensive work by experts in forensic accounting, asset tracing and recovery, and blockchain analytics, among other areas, it is extremely challenging to trace substantial assets of the Debtors to any particular source of funding, or to differentiate between the FTX Group’s operating funds and deposits made by its customers.In essence, what the report is saying is that because there was no functional distinction between customers’ money and the money that FTX executives spent on themselves, it’s pretty hard to tell what got spent on what. One of the biggest bombshells in the new report is the accusation that Sam Bankman-Fried and an unnamed company lawyer created “sham documents” as part of a plot to hide irregular financial dealings between FTX and one of its sister hedge funds, Alameda. According to the report, the documents were then shown to an outside auditor, which wrote up a financial audit that “inaccurately and misleadingly characterized FTX Trading Ltd.’s relationship with Alameda, and did not record any fiat currency of FTX.com customers.” FTX then reportedly showed the fake financial documents to investors during a series C fundraising round, which helped the company raise some $400 million dollars.Because of all this alleged monkey business, Bankman-Fried is currently facing a long, long, long list of federal charges and, thus, a substantial stint in prison. Given the circumstances, it makes sense that the former crypto mogul recently tried to get his criminal case thrown out. Indeed, in May, attorneys representing SBF filed a motion to dismiss all but three of the criminal charges levied against him, on the basis of some serious legal gymnastics. However, on Tuesday a federal judge declared the SBF team’s motion “moot or without merit,” allowing the criminal case against the former executive to proceed.“Dismissal of charges ‘is an “extraordinary remedy” reserved only for extremely limited circumstances implicating fundamental rights,‘” wrote Judge Lewis Kaplan in a memo issued Tuesday in U.S. District Court for the Southern District of New York. “The Second Circuit has deemed dismissal an ‘extreme sanction’ that has been upheld ‘only in very limited and extreme circumstances,’ and should be ‘reserved for the truly extreme cases,’ ‘especially where serious criminal conduct is involved.’”So it appears as if ol’ Sam is going to remain in the U.S. criminal justice system for the time being. What will financial investigators dig up next? Tune in next time for more financial misadventures in FTX’s bankruptcy proceedings...