$1 billion of client funds are missing at failed crypto company FTX According to two sources who spoke anonymously to CNBC, at least $1 billion of customer funds have vanished from collapsed crypto exchange FTX. The founder of the exchange, Sam Bankman-Fried, transferred $10 billion in customer funds to his own trading company, Alameda Research. The people told Reuters. A large portion of the money is now gone. One source claimed the missing amount was about $1.7 billion, while another said it might be as high as $2 billion. Although it's already common knowledge that FTX funds customer funds to Alameda, the missing customer funds will be reported here for the first time. According to the two sources, records released last Sunday by Bankman-Fried revealed a major debt. The records showed an up-to-date account of the situation at the time and were shared with other senior executives, both sources said. Both sources have been senior FTX employees until this week when they were briefed on TOC's finances by top staff. Bahamas-based FTX filed for bankruptcy on Friday after a rush of customer withdrawals earlier this week. The company was unable to reach a rescue deal with Binance, and the result is crypto's highest-profile failure in recent years. In a text message to Reuters, Bankman-Fried said that he disagreed with the characterization of the $10 billion transfer. "We didn't exchange anything," he said plainly. "We had some confusing internal labelling and we misunderstood it." He refused to go into more detail. Bankman-Fried responded, “???” FTX and Alameda do not have anything to say about the issue at this time. Friday, Bankman-Fried tweeted that he was piecing together what had happened at FTX. "I was shocked to see things unfold the way they did earlier this week," he wrote. "I will, soon, write up a more complete post on the details." Corporate Executive Officer of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington DC. The crypto's white knight lost 94% of his wealth in a single day. Reuters reported previously that FTX lost a lot of money because of losses at Alameda. This loss has been a big part of the company's problems. Customers withdrew their funds from the exchange last Sunday, just days after Changpeng Zhao, CEO of Binance, made a statement in CoinDesk's article. Reporters revealed that Alameda was holding much of its $14.6 billion assets in FTX tokens. A meeting was held with executives to decide how much outside funding he needed to cover FTX’s shortfall. A decision was made that the company would need to request a specific amount from investors in order to meet their end of year budget. Reuters reported that Bankman-Fried confirmed the meeting took place. Bankman-Fried showed the company’s regulatory and legal heads some documents that illustrate how FTX moved around $10 billion in client funds before shutting down, according to two people. The documents show that FTX loaned a lot of this money to Alameda, the company they helped with going public, they said. Accounts show that between $1 billion and $2 billion of the funds Alameda collected was unaccounted for. The spreadsheets, which had not been filled out to indicate where the funds were moved to, did not shed any light on what became of the money. As our legal and finance teams delved deeper into Bankman-Fried's activities, they found a "backdoor" in FTX's bespoke bookkeeping software. When Bankman-Fried set up a backdoor to the corporate network, he was able to execute commands that could alter company records without triggering either internal compliance or accounting flags. This set-up meant that when $10 billion in funds moved from their account at FTX to Alameda, there were no flags triggered at FTX. Sam Bankman-Fried, founder and CEO of FTX, speaks during the IIF Annual Meeting in Washington, D.C. His company hosts cryptocurrency derivatives exchanges, a new way to speculate on digital currencies. Visitors can trade bitcoin futures and options against it. Photographer: Ting Shen/Bloomberg via Getty Images What is next for crypto when FTX collapses, causing 'Lehman moment'? Reuters reports that Ron Bankman-Fried denied installing a backdoor in GreatCall Dental Communications. The Securities Exchange Commission is investigating FTX.com's handling of customer funds, as well as its crypto-lending activities, according to Reuters. This source also said that the Department of Justice and the Commodity Futures Trading Commission are also investigating the company. FTX's bankruptcy marked a stunning reversal for Bankman-Fried. The 30-year-old led FTX to become one of the largest crypto exchanges and accumulated a personal fortune estimated at nearly $17 billion. FTX was valued in January at $32 billion, with investors including SoftBank and BlackRock. The FTX cryptocurrency recently doubled in value, and then crashed to near-zero. This is sending shockwaves through the cryptosphere, and comparisons to the Dot-Com era are being drawn. FTX said the company had turned over control to John J. Ray III, a restructuring specialist who handled the liquidation of Enron Corp.