On November 9, former FTX Digital Markets co-CEO Ryan Salame informed the Securities Commission of the Bahamas (SCB) that FTX was transferring customer funds to its sister trading firm Alameda Research.
Salame also told the SCB that only three people had the necessary access to transfer customer funds from the crypto exchange to the hedge fund: former FTX CEO Sam Bankman-Fried “SBF,” FTX co-founder Zixiao “Gary” Wang, and FTX Director of Engineering Nishad Singh.
These details were shared in the records filed in the Bahamian court yesterday (14 December).
Salame’s allegation prompted SCB executive director Christina Rolle to request an investigation from the Royal Bahamas Police Force commissioner. The exchange was forced to close down only two days later.
This is the first reported case of a high-ranking executive at an FTX entity informing a local regulatory body about a potential fraud at the cryptocurrency exchange.
SBF was arrested by Bahamian police on Monday (12 December), pending extradition to the United States. He has been charged with eight criminal counts, including wire fraud and conspiracy to commit money laundering, by the United States Department of Justice.
“As today’s charges demonstrate, this was not a case of mismanagement or poor oversight, but of deliberate fraud, plain and simple,” said U.S. Attorney Damian Williams. His case has been described by prosecutors as “one of the largest financial frauds in American history.”
FTX was once the third-largest cryptocurrency exchange, valued at $32 billion. Many blue-chip investors, including Sequoia Capital, had backed it. Customers attempted to withdraw funds from the exchange, and the company went bankrupt in less than a week at the beginning of November.
Because only SBF has been charged thus far, there is speculation that many FTX executives may be cooperating with prosecutors.