The FTX scandal writes new chapters every hour. Police this week arrested Sam Bankman-Fried in the Bahamas, where they hope to be extradited to the United States, on charges of fraud and conspiracy. And to spice things up further, we are told that Ryan Salame, co-CEO of the Bahamas branch, alerted authorities to the illegal activities of the parent company shortly before filing for bankruptcy.
FTX co-CEO Ryan Salame contacted authorities in the Bahamas in the days leading up to the company’s bankruptcy to warn of the transfer of user funds to Alameda Research.
The Financial Times reports that Salame notified the Bahamas Securities and Exchange Commission that client funds were diverted to Alameda Research to cover their losses. This happened on November 9; that is, two days before FTX filed for Chapter 11, US bankruptcy law.
Until now, contacts between the FTX director and regulators have been hidden from the public. However, this came to light after the release of official Bahamian Supreme Court documents related to the case. In particular, Ryan Salame was in direct contact with Christina Rolle, CEO of the Bahamian Securities and Exchange Commission.
In an email sent to Bahamas Police Commissioner Clayton Fernander on the aforementioned date, Rolle said:
“Unfortunately, Mr. Ryan Salame, President of FTX Digital, informed the Commission today that client assets that may have been held by FTX Digital have been transferred to Alameda Research. Alameda and FTX Digital are related companies. More specifically, Mr. Samuel Bankman – Fried is one of the founders of FTX Digital and Alameda.
The Commission understands that Mr Salame warned that transferring client assets in this way was contrary to FTX Digital’s corporate governance and normal operations. In short, such transfers were not authorized and may therefore constitute embezzlement, theft, fraud or other crime.”
But Salame pointed out not only FTX’s illegal activities, but also the potential perpetrators of them. According to the director, only three people had the authority and access to passwords to transfer money to FTX: Sam Bankman-Fried, Gary Wang (co-founder of the exchange) and Nishad Singh (former head of engineering).
The landscape of Sam Bankman-Fried and FTX is complicated
The case of Ryan Salame is also curious. That the co-CEO of FTX Bahamas betrayed the entrepreneur a few days after the outbreak of the liquidity crisis, and 48 hours before the bankruptcy, does not seem coincidental. Experts believe the scale of the chaos unleashed on the cryptocurrency exchange was such that top executives chose to cooperate with authorities to avoid prosecution.
Indeed, the fact that only Sam Bankman-Fried is the only defendant in the company’s debacle has led to speculation that other executives have also entered into a deal to cooperate with the investigation.
Right now, the founder and former CEO of FTX is still in prison in the Bahamas. His lawyer asked for bail pending his extradition case, but was denied. According to Bloomberg, the possibility of being transferred to the United States no longer scares the entrepreneur, given the current conditions of his imprisonment. The aforementioned media reports that Bankman-Fried was locked up in an overcrowded, rat-infested prison.
Meanwhile, FTX bankruptcy attorneys continue to struggle to recover client funds. In the early days of being in charge of the company’s restructuring, John J. Ray assured that they still had not found all their bank accounts and cryptocurrencies. And a few days later, another lawyer admitted that most of the property had been stolen.
Currently, FTX Japan customers are the closest to getting their money back. As we have learned in recent days, the subsidiary has promised to restore the charges in “a few weeks”. However, the company’s former employees were skeptical of the plan’s success.