by A high-ranking executive of the Bahamian entity FTX alerted local regulators of potential fraud perpetrated at the cryptocurrency exchange just two days before the exchange was forced to shut down.
According to Bahamian court documents filed on 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 sending the client funds to its sister trading firm Alameda Research.
Salame said the funds were “to cover Alameda’s financial losses” and the transfer “was not permitted or agreed to by their clients.”
He also told the SCB that only three people had the access needed to move customer assets to Alameda: former FTX CEO Sam Bankman-Fried, FTX co-founder Zixiao “Gary” Wang and FTX Nishad Singh.
The allegation prompted SCB Executive Director 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 some other crime”.
The next day, November 10, the SCB froze FDM’s assets, suspended its registration in the country, and the Supreme Court of the Bahamas appointed an interim liquidator in an effort to preserve the company’s assets.
Records reveal the first known case of an FTX or Alameda Assistant Authorities executive.
Salame is believed to be in Washington DC according to the documents and has not spoken publicly since the collapse of the exchange.
His latest audience tweets it was November 7th where he replied “lol [sic]” to Binance co-founder Yi He who explained why the exchange sold its FTX Token (FTT) holdings.
Related: Realized losses from the FTX crash peaked at $9 billion, far below previous crises
Another former executive of FTX affiliates is also thought to have assisted the authorities in recent weeks
On Dec. 4, speculation abounded after images purported to show Alameda CEO Caroline Ellison in a New York bar within walking distance of the U.S. attorney’s office, leading some to believe she may have squeezed a deal with the authorities in the wake of the FTX Crash.
Bankman-Fried is the only person from FTX and Alameda to have been charged so far, adding credence to speculation that executives from both companies are assisting authorities.
He is accused of money laundering and political campaign finance violations along with wire and securities fraud.
Bankman-Fried, Wang, Singh and Ellison were said to have run a group chat on the Signal encrypted messaging app called “Wirefraud” used to send secret information about FTX and Alameda’s operations. Bankman-Fried denied any knowledge of or involvement in the group.
Update (Dec 15, 5:40 UTC): Added more information from the court filing along with more background information.
