Report Suggests FTX's Tokenized Stocks Might Not Have Been Backed 1:1, Synthetics May Have Been Used to 'Manipulate' Real Stock Prices

On Dec. 4, 2022, a report details that FTX-based synthetic stocks may have been used to manipulate the value of AMC shares. In May 2021, FTX offered 36 tokenized stocks but speculators believe it’s questionable whether or not the firm actually held the real stocks in the first place.

FTX Listed 36 Synthetic Stocks and Minted Hundreds of Thousands of Tokenized Shares, Report Questions Whether or Not the Firm Actually Owned the Stocks

FTX has been under the microscope ever since the exchange collapsed during the first week of November 2022. Since then, there’s been a lot of information to process and new information released. On Sunday, a report details that tokenized stocks listed on FTX may have been used to “manipulate the price of AMC shares.” The publication thechainsaw.com and its report show that while FTX’s terms of service said the firm’s synthetic stocks were backed 1:1, that 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.

Report Points Out That FTX Terms of Service Said: ‘Buyers of the Fractional Stocks Have Neither a Claim to Delivery of the Underlying’

Additionally, thechainsaw.com published another report that details that Gamestop and Tesla shares could have been manipulated as well. 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.

Furthermore, 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 tokenised 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.