According to a report released on December 4, 2022, it is suggested that FTX tokenized shares may not have been backed 1:1 and synthetic stocks may have been utilized to “manipulate” the price of real shares.
FTX Lists 36 Synthetic Stocks and Issues Hundreds of Thousands of Tokenized Shares, Raising Questions if the Company Actually Holds the Stock
FTX has been under intense scrutiny since it crashed in the first week of November 2022. Since then, numerous findings have been released. On Sunday, a report was published that looked into how tokenized shares listed on FTX could have been used to interfere with AMC’s share price. Thechainsaw.com’s post and the report it presented indicated that although FTX’s terms stated that synthetic shares were backed 1:1, this may not have been accurate.
“FTX enumerates AMC wrapped token[s] to trade on its synthetic derivatives trading platform”, Chainsaw’s tweet reads. “[Etherscan.io] currently shows that there are 545,000 synthetic AMC tokens on the Ethereum blockchain. FTX claimed that the underlying shares were held in custody by an asset manager [CM Equity AG]”. This tweet was followed by a series of statements:
CM Equity AG has recently ended all relations with FTX, as reflected in its announcement made in December 2021. This means that FTX most likely lied about AMC token custody for most of 2022.
The Report Points Out that FTX’s Terms of Service State: ‘Fractional Share Buyers Have No Claim to Delivery of the Underlying.’
Thechainsaw.com also published another report that suggested that Gamestop and Tesla shares could have been manipulated. Researchers noted that the leaked FTX balance sheets, which were revealed by the Financial Times (FT), showed that the company had no other assets apart from Robinhood (HOOD) shares. Currently, there is no documentation that proves that FTX owns any of the tokenized shares it listed.
In addition, during Sam Bankman-Fried’s (SBF) Twitter Spaces interview with Mario Nawfal, SBF was accused by speculators of describing a system in which tokens and BTC could easily be printed from thin air. At this point in Nawfal’s Twitter Spaces interview, one individual was charged with FTX’s Alameda printing tokens from thin air to change the listing price of its project’s token. Thechainsaw.com reporter Tom Mitchelhill also wrote that FTX “knowingly lied” about the information concerning the tokenized stock sale.
“Despite FTX’s website’s clear assurances that investors could redeem their tokenized assets for the underlying at any time, an in-depth look at FTX’s own terms of service on tokenized shares and disclosure document key points out: ‘Fractional share buyers have no claim to delivery of the underlying,’” Mitchelhill wrote. “In short, this means that FTX knowingly lied and deceived customers on its official website, going against their own terms of service.” Moreover, the report suggests that “listing and custody inconsistencies” could be applied to any FTX offer.
What are your thoughts on FTX potentially using synthetic shares to manipulate real share prices? Share your opinion in the comments below.
