Christina Rolle, a securities regulator in the Bahamas, said in court that FTX Digital Markets co-CEO Ryan Salame had notified her of the improper transfer of client cash to Alameda Research.
One of Sam Bankman-senior Fried’s lieutenants disclosed to Bahamian authorities that client cash from the business was utilized to patch gaps in Alameda Research’s balance sheet.
During a call with Bahamian authorities on November 9, FTX Digital Markets co-CEO Ryan Salame informed Bahamas Securities Commission Executive Director Christina R. Rolle that FTX may have moved customer funds to Alameda Research to offset the hedge fund’s financial losses.
Rolle wrote in a court declaration submitted on November 11 to the Supreme Court of the Bahamas that the transfer of customer funds was “contrary to regular corporate governance and operations at FTX Digital,” requesting that the regulator assume control of the company’s remaining assets. Simply put, such transactions were not authorized or approved by their customers.
The statements made by Salame to the regulator also led her to inform the Bahamian police and seek an inquiry into the firm “immediately.” The police request states that Salame was in Washington, D.C. on November 9.
Officials were informed by the co-CEO of FTX DM that only Bankman-Fried, Nishad Singh, and Gary Wang have the appropriate transfer passwords. Bankman-Fried and Wang were mentioned as those responsible for a separate transfer of cash and the minting of additional tokens in a court petition submitted by FTX’s representatives in bankruptcy proceedings on Monday. The filing came after Bankman-Fried and Wang initiated the bankruptcy process.
Rolle’s court-approved request was included in a fresh bankruptcy filing submitted by the Bahamian government today in response to arguments in the U.S. Bankruptcy Court for the District of Delaware, indicating coordination with Bankman-Fried.
Attorneys for FTX, representing the company’s new management, have asserted that Bankman-Fried, Wang, and Bahamian authorities, including the Securities Commission, may have broken bankruptcy legislation concerning the transfer of assets after commencing the process.
The Bahamian regulator has strongly rejected any collaboration with Bankman-Fried and has submitted these papers as evidence to support its position. On Friday, the judge presiding over the case will hear further arguments, with a full hearing slated for January 6.
The request was made on the same day that Binance withdrew its offer to purchase FTX. This week, Bankman-Fried was detained by Bahamian police, refused bail, and charged by a federal grand jury in the United States on several counts of fraud and conspiracy to conduct fraud.
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