A senior executive at Bahamian entity FTX informed local regulators of possible fraud perpetrated on the cryptocurrency exchange just two days before the exchange was forced to shut down.
According to Bahamian court records filed on December 14, Ryan Salame, former co-CEO of FTX Digital Markets (FDM), told the Securities and Exchange Commission of the Bahamas (SCB) on November 9 that FTX was sending client funds to its sister trading company Alameda Research.
Salame said that the funds were to “cover Alameda’s financial losses” and that the transfer “was not permitted or consented to by its clients.”
He also told the SCB that only three people had the necessary access to transfer client assets to Alameda: former FTX CEO Sam Bankman-Fried; FTX co-founder Zixiao “Gary” Wang; and FTX engineer Nishad Singh.
The complaint prompted SCB CEO Christina Rolle to contact the commissioner of the Royal Bahamas Police Force to request an investigation.since the information “could constitute misappropriation, theft, fraud or some other crime”.
The next day, On November 10, the SCB froze FDM’s assets, suspended its registration in the country, and the Bahamas Supreme Court appointed a provisional liquidator to try to preserve the company’s assets.
The records reveal the first known case of an FTX or Alameda executive aiding authorities.
Salami is believed to be in Washington DC, according to the files, and has not spoken publicly since the exchange collapsed.
His last Tweet public was on November 7, in which he replied “lol [sic]to Binance co-founder Yi He after he explained why the exchange sold its holdings in FTX Token (FTT).
Another former executive from FTX affiliated companies is also believed to have been assisting authorities in recent weeks.
On December 4, speculation abounded after footage showed Alameda CEO Caroline Ellison in a New York coffee shop, a short distance from the US attorney’s office, which led some to believe that he may have been making a deal with the authorities following the collapse of FTX.
Bankman-Fried is the only person from FTX and Alameda to have been charged so far, lending more credence to speculation that executives from both companies are helping authorities.
He faces charges related to money laundering and political campaign finance violations, as well as wire and securities fraud.
Bankman-Fried, Wang, Singh and Ellison are alleged to have operated a group chat on the encrypted messaging app Signal called “Wirefraud”, used to send secret information about the operations of FTX and Alameda. Bankman-Fried denied any knowledge of or involvement with the group.
Update (Dec 15 5:40am UTC): Added more information from the court filing along with additional background.
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