FTX, one of the leading cryptocurrency exchanges, has been under scrutiny since the exchange collapsed in early November 2022. New reports have emerged that suggest FTX’s tokenized stocks may have been used to manipulate the value of AMC shares.
In May 2021, FTX offered 36 tokenized stocks, but it has been questioned whether the firm actually held the real stocks in the first place. The publication thechainsaw.com and its report show that while FTX’s terms of service stated that the firm’s synthetic stocks were backed 1:1, this may not have been the case.
“FTX listed wrapped AMC token[s] for trading on its synthetic derivatives trading platform,” Chainsaw’s Twitter account details. “[Etherscan.io] currently shows that there are 545,000 synthetic AMC tokens on the Ethereum blockchain. FTX claimed that the underlying stocks were custodied with asset manager [CM Equity AG],” Chainsaw’s tweet adds. The publication’s Twitter account continued: “However, a recent rectification from CM Equity shows that the firm terminated its relationship with FTX in December 2021, which means that FTX lied about the custody of AMC tokens for the better part of 2022.”
Thechainsaw.com published another report that showed Gamestop and Tesla shares could also have been manipulated. Furthermore, the researchers note that the leaked FTX balance sheet disclosed by the Financial Times (FT) shows the company only holds Robinhood (HOOD) shares. There’s no documentation (as of right now) that’s been made public that shows FTX actually owned any of the 36 tokenized stocks it listed.
During Sam Bankman-Fried’s (SBF) interview on Mario Nawfal’s Twitter Spaces, speculators accused SBF of describing a system where tokens and BTC could be printed out of thin air. Additionally, when SBF left Nawfal’s Twitter Spaces interview, an individual accused FTX and Alameda of printing tokens out of thin air to manipulate the value of his project’s token listing.
Moreover, thechainsaw.com reporter Tom Mitchelhill says FTX “knowingly lied” about its tokenized stock offering. “Despite clear claims from FTX website assuring investors that they could redeem their tokenized assets for the underlying at any time, a deeper look into FTX’s own terms of service on tokenized stocks and Key Information Document state: ‘buyers of the Fractional Stocks have neither a claim to delivery of the underlying,'” Mitchelhill wrote. “This ultimately means that FTX knowingly lied and misled customers on its official website, and went directly against its own terms of service.”
Mitchelhill’s report further suggests that “inconsistencies concerning their listing and custody” could be applied to literally anything FTX offered. This raises serious concerns about the legitimacy of FTX’s business practices and calls into question the trustworthiness of the exchange. The use of tokenized stocks has been a hot topic in the financial world. While they offer the potential for increased liquidity and greater accessibility to traditional markets, there are also risks involved. In the case of FTX, it appears that these risks were not adequately addressed, leading to potentially damaging consequences for investors.
It’s important to note that these allegations are still unproven and FTX has not yet been found guilty of any wrongdoing. However, the evidence presented in these reports raises serious concerns and should be thoroughly investigated. In the meantime, investors should exercise caution when dealing with FTX and consider the potential risks involved. The use of synthetic and tokenized assets can be a complex and nuanced topic, and it’s crucial to fully understand the potential implications before making any investment decisions.