Before FTX’s bankruptcy, the authorities in the Bahamas, where the crypto exchange was headquartered, had learned from a former FTX executive, Ryan Salame, that Sam Bankman-Fried was diverting customers’ funds to shore up his trading company, Alameda Research.

An Exec Tipped Off the Bahamian Authorities on the Potential Fraud at FTX

On November 9, a day after the cryptocurrency exchange suspended withdrawals, Salame wrote to the Securities Commission of the Bahamas that customer funds from FTX were being channelled to cover Alameda’s losses. Salame told the regulator that two other executives, Nishad Singh and Mr Zixiao (Gary) Wang, had access to transfer the assets in that manner besides Bankman-Fried.

Upon the disclosure, the Bahamian securities regulator said it requested the Financial Crimes Investigation Branch of the nation’s police force to investigate the situation at FTX Digital Markets, the local operating entity of FTX.

“The Commission understood Mr Salame as advising that the transfer of clients’ assets in this manner was contrary to the normal corporate governance and operations of FTX Digital,” the Securities Commission of the Bahamas said. “Put simply, that such transfers were not allowed and therefore may constitute misappropriation, theft, fraud or some other crime.”

Perhaps, this disclosure on Wednesday explains why the Bahamas regulators were swift in deciding to appoint liquidators for the exchange and also ordering the transfer of the remaining assets of FTX Digital Market to a wallet controlled by the commission shortly after Sam Bankman-Fried declared bankruptcy.

SBF is Now Arrested and Charged

In addition to being arrested, Bankman-Fried was recently hit with multiple charges from US authorities. The Justice Department charged the 30-year-old for “willingly and knowingly did combine, conspire, confederate and agree together with each other to commit wire fraud,” while the Securities and Exchange Commission (SEC) charged him for “violating the anti-fraud provisions of the Securities Act.”

The two other close associates of Bankman-Fried have since laid low, and no charges have been filed against them.

(By Ibiam Wayas)

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