PORTLAND, Oregon – Several days before FTX collapsed into bankruptcy, one of Sam Bankman-Fried’s most senior executives was tipping off the Bahamian authorities to possible misuse of funds at the exchange.
Mr Ryan Salame, the former co-chief executive of FTX Digital Markets, told the regulators on Nov 9 that client assets were transferred to Alameda Research to “cover financial losses” at the trading firm, court filings show.
Mr Salame further alleged that only three people had the ability to authorise such a transfer: Bankman-Fried, former engineering executive Nishad Singh, and FTX co-founder Gary Wang, according to the court filings. The Financial Times first reported on the contents of the documents.
Mr Salame indicated to the executive director of the Securities Commission of the Bahamas on a conference call that “such transfers were not allowed and therefore may constitute misappropriation, theft, fraud or some other crime”, the filings show.
The disclosure triggered an urgent request from the securities commission’s executive director Christina Rolle to the local commissioner of police for an investigation, according to e-mails included in the court filings.
FTX experienced a bank run in the few days prior to Mr Salame approaching the Bahamian authorities, and it filed for bankruptcy on Nov 11.
The filings show that during that pivotal pre-bankruptcy period, Bankman-Fried exchanged e-mails with several Bahamian officials, including Ms Rolle and Attorney-General Ryan Pinder.
In one e-mail sent on the night of Nov 9, Bankman-Fried apologised to Mr Pinder for “delayed responses” to previous messages. In that e-mail, Bankman-Fried wrote “it’s been a hectic week but that’s on me. Myself, and Joe (cc’ed), will be responsive going forward”. Bankman-Fried’s father, Mr Joseph Bankman, was copied in the e-mail.
In the same message, Bankman-Fried wrote that FTX had “segregated funds for all Bahamian customers”, adding that “we would be more than happy to open up withdrawals for all Bahamian customers on FTX, so that they can, tomorrow, fully withdraw all of their assets, making them fully whole”.
Bankman-Fried remains the only senior executive charged with any crimes and is facing extradition to the United States from the Bahamas.
Several billion dollars’ worth of customer assets has disappeared, FTX’s new chief executive John Ray III testified before the US Congress on Wednesday. Some of the funds most likely went to Alameda, he said.
Mr Salame did not return calls or messages seeking comment. Bankman-Fried is now in a Bahamas jail after being denied bail. BLOOMBERG
