Details are emerging!The internal “whistleblower” cheated SBF, and a Korean account became the key clue Cao Zexi
Through various means, SBF funneled billions of dollars of FTX client funds into Alameda. And when Alameda’s chaotic financial situation was exposed, customers panicked to withdraw money only to find that their money had disappeared. And all this, on the eve of FTX’s bankruptcy, was disclosed to the regulatory agency by an executive of the company, and the world was able to know how chaotic the exchange that was once enshrined in the altar was.
How did FTX transfer the money?
Now, more and more details are emerging, which seem to point to the company’s former CEO Sam Bankman-Fried (SBF) brazenly moving funds between several companies under his control to make up for losses.
Insider ‘whistleblower’ reports SBF to Bahamas on eve of bankruptcy
According to media reports, the insider of FTX was disclosed by one of the company’s most senior executives, former co-CEO of FTX Digital Markets Ryan Salame.
Days before FTX’s bankruptcy, Salame reported the exchange to Bahamian authorities for possible misuse of funds. Court documents show that Salame told Bahamian regulators on Nov. 9 that client assets had been transferred to Alameda Research “to cover the trading firm’s financial losses.”
According to court documents, Salame further claimed that only three individuals had the ability to authorize the transfer: SBF, former engineering executive Nishad Singh, and FTX co-founder Gary Wang.
The documents show that Salame told Christina Rolle, executive director of the Bahamas Securities Commission, in a conference call:
Such transfers are impermissible and may constitute misappropriation, theft, fraud or some other crime.
The disclosure triggered an urgent request from Rolle to investigate with local police, according to emails included in court documents.
During that critical period before bankruptcy, SBF had email exchanges with several different Bahamian officials, including Rolle and Attorney General Ryan Pinder, the documents show.
In an email sent on the evening of November 9, SBF apologized to Pinder for the “delayed response” to the previous message:
I’ve been busy this week, but it’s my responsibility. Myself and Joe (cc) will respond in the future.
SBF’s father, Joseph Bankman, was in the CC line of the email.
In the same email, SBF wrote that FTX had “segregated funds for all Bahamian clients,” adding:
We are more than happy to open up withdrawals on FTX for all Bahamian clients so they can withdraw all their assets completely and completely tomorrow.
Currently, SBF remains the only senior executive charged with any crime in the FTX implosion and faces extradition from the Bahamas to the United States.
Where did the money go?Mysterious South Korean account may reveal the answer
Where did executives such as SBF transfer their money?
A GitHub account named after former FTX executive Nishad Singh wrote code that hid Alameda Research’s ballooning liabilities on FTX, according to an internal document.
The document provided clues in the form of comments tied to specific lines of code about the origins of a mysterious account on FTX that regulators say helped hide mounting debt at its sister trading firm, Alameda Research.
Singh, a former director of engineering at FTX, has not been charged with a crime. It is unclear whether other FTX employees had access to the account.
The account’s notes included notes such as “Korea KYC” and “BD Expenses Account,” the latter of which was linked to the “Korea Expenses” account.
The U.S. Commodity Futures Trading Commission (CFTC) said in a civil lawsuit on Tuesday that Alameda diverted $8 billion in debt to an FTX client account that could not easily be identified as belonging to Alameda. The SBF called them “the accounts of our Korean friends” and directed that the accounts be created at least in part to conceal Alameda’s substantial liabilities, the CFTC said.
The so-called South Korean accounts enjoyed the same privileges as Alameda master and sub-accounts, including exemptions from some of FTX’s risk management policies, the suit alleges.
Although Alameda has had virtually unlimited access to FTX client funds for its own trading purposes since the creation of the FTX exchange, the company began its upward spiral in May following a $60 billion exchange built on tokens TerraUSD and Luna. The crypto ecosystem collapses, and lenders demand payment. This led Alameda to increase its use of FTX client funds, the regulator said.
Do Kwon, the South Korean national behind TerraUSD, is reportedly in Serbia. In September, a South Korean court issued an arrest warrant for him on charges of violating capital market laws.
According to the CFTC’s allegations, SBF considered closing Alameda around September, months after the alarming margin calls began. But the company didn’t really shut down.
The CFTC’s complaint describes the “Korean account” as a sub-account of Alameda that was not opened under the identifier “alameda-research.com” and could not be easily identified as an Alameda-related account.
U.S. authorities say the core accounting issues that led to FTX’s collapse existed from the start. The regulator said the issues that led to FTX’s crash after more than three years were never resolved in the first place.
When customers start sending money to FTX to open an account with the exchange, those funds are deposited directly into a bank account controlled by Alameda. According to the CFTC’s allegations, what initially appeared to be an accounting oversight quickly turned into a major fraud.
The CFTC charge alleges that FTX would eventually create its own deposit accounts for clients, but those early deposits into Alameda bank accounts, combined with those clients’ later deposits, would eventually result in an $8 billion hole in FTX’s books.
To make matters worse, Alameda was allowed to borrow as much money as it could from FTX, mostly drawing from customer deposits.
Ultimately, the money was wiped out by risky bets made by Alameda and SBF himself, who took the funds for himself and used them to buy mansions, fly private jets and make political donations. The CFTC said the money was used by FTX to buy advertising during the Super Bowl and pay for the naming rights of the venue where the Miami Heat played.
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