by A senior executive at FTX’s Bahamian unit alerted local regulators to a possible cryptocurrency exchange scam just two days before the exchange was forced to close.
According to Bahamian court filings filed Dec. 14, Ryan Salame, the former co-CEO of FTX Digital Markets (FDM), told the Securities Commission of the Bahamas (SCB) on Nov. 9 that FTX was remitting client funds to its sister trading company Alameda Research.
Salame said the funds were intended to “cover financial losses incurred by Alameda” and that the transfer “was not permitted or approved by its customers.”
He also told 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 allegation prompted SCB Chief Executive Christina Rolle to contact the Commissioner of the Royal Bahamas Police Force to request an investigation, as the information “may constitute embezzlement, theft, fraud or any other crime”.
The next day, November 10, SCB froze FDM’s assets, suspended its registration in the country, and the Bahamas Supreme Court appointed an interim bankruptcy trustee who attempted to preserve the company’s assets.
The records reveal the first known instance of an FTX or Alameda executive supporting authorities.
Salame is believed to be in Washington DC, according to the filing, and has not spoken publicly since the stock market collapsed.
His last public tweet was on November 7th when he replied: “lol [sic]’ to Binance co-founder Yi He after explaining the reason why the exchange sold its FTX token (FTT) holdings.
Related: Realized losses from the FTX collapse peaked at $9 billion, well below previous crises
Another former executive of FTX affiliates is also believed to have assisted authorities in recent weeks
Speculation abounded on December 4 after images allegedly showed Alameda CEO Caroline Ellison at a New York City coffee shop a short walk from the US Attorney’s Office, leading some to believe she may have struck a deal with the Authorities had completed collapse of FTX.
Bankman-Fried is the only person from FTX and Alameda to have been charged so far, giving credence to speculation that executives from both companies are supporting the authorities.
He faces charges of money laundering and political campaign finance violations, as well as wire and securities fraud.
Bankman-Fried, Wang, Singh and Ellison are said to have operated a group chat on the encrypted messaging app Signal, dubbed Wirefraud, which was used to send classified information about FTX and Alameda’s operations. Bankman-Fried denied any knowledge of or involvement with the group.
Update (December 15, 5:40 am UTC): Added more information from the court record along with additional background information.
