the scandal of FTX write new chapters every hour. Police this week arrested Sam Bankman-Fried in the Bahamas, where he hopes to be extradited to the United States, on charges of fraud and conspiracy. And to add more seasoning to the situation, it was learned that Ryan Salamico-CEO of the Bahamian subsidiary, alerted the authorities to the illegal activities of its parent company just before the bankruptcy was declared.
Financial Times reports that Salame advised the Bahamas Securities and Exchange Commission that client funds were being diverted to Alameda Research to cover their losses. This occurred on November 9; that is, two days before FTX filed for Chapter 11 of the United States Bankruptcy Law.
Until now, contact between the FTX executive and regulators had been kept hidden from the public. However, it came to light after the disclosure of official documents of the Bahamas Supreme Court related to the topic. Specifically, Ryan Salame was in direct contact with Christina Rolleexecutive director of the Bahamian Securities Commission.
In an email sent to Clayton Fernander, Bahamas Police Commissioner, on the aforementioned date, Rolle stated:
“Unfortunately, Mr. Ryan Salame, President of FTX Digital, today informed the Commission that client assets that may have been held by FTX Digital have been transferred to Alameda Research. Alameda and FTX Digital are related companies. Specifically, Mr. Samuel Bankman-Fried is one of the founders of FTX Digital and Alameda.
The Commission understood that Mr. Salame advised that the transfer of client assets in this manner was contrary to the corporate governance and normal operations of FTX Digital. Simply put, that such transfers were not permitted and therefore may constitute misappropriation, theft, fraud, or some other crime.”
But Salame did not limit himself to pointing out the illegal activities of FTX, but also the potential perpetrators of them. According to the manager, only three people had the authority and access to the passwords to carry out the transfers of funds to FTX: Sam Bankman-Fried, Gary Wang (co-founder of the exchange) and Nishad Singh (former engineering leader).
The landscape of Sam Bankman-Fried and FTX is complicated
The case of Ryan Salame is otherwise curious. That the co-CEO of FTX Bahamas ratted out the company’s leader just days after the liquidity crisis broke out, and 48 hours before bankruptcy, it doesn’t seem casual. Experts consider that the magnitude of the chaos unleashed in the exchange of cryptocurrencies was such that the main executives would have chosen to cooperate with the authorities to avoid being persecuted by the law.
In fact, the fact that only Sam Bankman-Fried is the only one charged in the company’s debacle has led to speculation that other executives have also made a deal to collaborate with the investigation.
For now, the founder and former CEO of FTX is still in jail in the Bahamas. His lawyer applied for bail pending his extradition case, but was denied. In accordance with Bloomberg, the possibility of being transferred to the United States no longer frightens the businessman, considering the current conditions of his imprisonment. The aforementioned medium indicates that Bankman-Fried has been confined to an overcrowded and rat infested prison.
While this is happening, FTX’s bankruptcy attorneys continue to fight to recover client funds. In the first days in charge of the restructuring of the company, John J. Ray assured that they had not yet been able to find all their bank accounts and cryptocurrencies. And a few days later, another lawyer acknowledged that most of the assets had been stolen.
At the moment, the clients of FTX Japan they are the closest to recovering their funds. As was known in recent days, the subsidiary promised to restore withdrawals in “a matter of weeks”. However, former company employees have been skeptical about the plan’s success.