FTX executives used ‘Korea’ account to mask giant Alameda liabilities
Sign up now: Get ST's newsletters delivered to your inbox
A US regulator has alleged that the mysterious account on FTX helped mask mounting debts of its sister trading firm Alameda Research.
PHOTO: REUTERS
Follow topic:
New York - A GitHub account bearing the name of former FTX executive Nishad Singh authored code that hid Alameda Research’s ballooning liabilities on the now-collapsed cryptocurrency exchange, according to internal documentation reviewed by Bloomberg News.
The documentation, in the form of comments associated with specific lines of code, offers clues to the origins of a mysterious account on FTX that a regulator alleges helped mask mounting debts of its sister trading company Alameda Research.
The relationship between the two companies, and alleged misuse of FTX customer funds,
Mr Singh, who was FTX’s engineering director, has not been charged with a crime.
GitHub is a programming code repository used by firms and individual software developers to store and share code. It is frequently used to allow developers to work together.
It was not immediately clear whether any other FTX employees had access to the account.
The GitHub account bearing his name annotated the code snippets reviewed by Bloomberg with comments including “Korea KYC” and “BD expenses accounts”, the documentation showed.
Alameda shunted debts, which soared to US$8 billion (S$10.8 billion), to an FTX customer account that was not easily identifiable as belonging to Alameda, the US Commodity Futures Trading Commission (CFTC) alleged in a civil complaint on Tuesday.
Bankman-Fried, who founded Alameda and FTX, called it “our Korean friend’s account” and directed it to be created at least partially to mask Alameda’s gaping liabilities, the CFTC alleged.
The so-called Korean account enjoyed the same privileges as Alameda’s main account and sub-accounts, including exemptions from parts of FTX’s risk management policies, the lawsuit said.
Mr Singh and representatives for Bankman-Fried and FTX did not immediately respond to requests for comment. Bankman-Fried is being held without bail at a jail in the Bahamas as he awaits an extradition hearing in February.
Though Alameda enjoyed virtually unlimited access to FTX customer funds for its own trading purposes since the exchange was created, the company began to spiral in May, after a US$60 billion crypto ecosystem built on tokens TerraUSD and Luna collapsed, and lenders demanded payments.
That led Alameda to ramp up its use of FTX customer funds, regulators alleged.
Do Kwon, a South Korean national who was behind TerraUSD, is reportedly in Serbia.
Months after the jarring round of margin calls began, Bankman-Fried contemplated closing down Alameda around September, according to the CFTC complaint.
He drafted a Twitter thread to announce its closure, saying: “I feel really uncertain what’s right!” But Alameda never shut.
Bankman-Fried was jailed on Tuesday after the US authorities brought eight criminal charges against him, including fraud and conspiracy to commit money laundering. The US Securities and Exchange Commission also sued him.
The CFTC complaint described the “Korean account” as a sub-account of Alameda that was not opened under an “alameda-research.com” identifier and not otherwise readily identifiable as being an Alameda-associated account.
BLOOMBERG
