Reported by: Tim Craig, Drew Harwell and Nitasha Tiku

Before Sam Bankman-Fried’s $16 billion empire imploded, Margaux Avedisian remembers thinking there was something unsettling about the cryptocurrency wunderkind.

Bankman-Fried had become a legend by pushing an image of monkish aloofness, vowing to forsake the allures of his extraordinary wealth — sleeping on beanbag chairs, driving a Toyota Corolla — and to give away his fortunefor the greater good.

Yet in April, when Avedisian was hired as a master of ceremonies for a conference in the Bahamas sponsored by FTX, Bankman-Fried’s crypto exchange, she saw how the 30-year-old billionaire really lived: in a guarded island compound, every need closely catered to, the world’s elite at his beck and call.

Conference guests partied in casinos where Bahamians weren’t allowed to gamble and hobnobbed with celebrity attendees, including singer Katy Perry and football veteran Tom Brady. For one party, VIPs took a boat from the island to a second, even fancier island for a feast of lobster, a private DJ concert and an open bar.

“You’re living this lifestyle of poverty, but you’re partying with Katy Perry?” she recalled thinking. “Why would you want to hang out with these celebrities if you’re so head-down trying to change the world?”

As investigators begin to piece together FTX’s financial wreckage, the Bahamas has emerged as a centerpiece for Bankman-Fried’s many contradictions — and fueled questions about why so many there and elsewhere had supported a company with so many warning signs.

FTX had called itself “the cleanest brand in crypto” and promised investors “High Returns, No Risk.” But FTX’s new chief, John J. Ray III, hired to clean up the mess, said in a recent legal filing that Bankman-Fried’s “very small group of inexperienced, unsophisticated and potentially compromised individuals” in the Bahamas had spent lavishly on themselves while failing to track where billions of clients’ dollars were sent or stored.

Though FTX became one of the world’s biggest financial exchanges, rooted in a complex web of more than 130 now-bankrupt business entities, the team functioned like a dorm-room start-up, with no centralized lists of bank accounts or even employees, Ray said.

FTX spent clients’ funds on seaside homes for employees’ use and routed money to Bankman-Fried’s other company, the crypto trading firm Alameda Research, Ray said. Corporate reimbursements were often requested via an online chat box and approved by supervisors using “personalized emoji.” Only “a fraction” of customers’ money has been located and secured.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” said Ray, who once oversaw the liquidation of Enron, one of America’s most infamous corporate frauds.

Read full report: https://www.washingtonpost.com/technology/2022/11/24/ftx-bahamas-albany-fried/