US Probes FTX Founder for Fraud, Examines Cash Flows to Bahamas




  • In US
  • 2022-12-10 00:55:14Z
  • By Bloomberg
 

(Bloomberg) -- US prosecutors, laying the groundwork for a potential fraud case against Sam Bankman-Fried and others involved in the collapse of cryptocurrency giant FTX, are scrutinizing how funds held by the exchange operator moved outside the US as it was hurtling toward bankruptcy, according to a person familiar with the matter.

Most Read from Bloomberg

  • Putin Says Russia May Add Nuclear First Strike to Strategy

  • Harry and Meghan Throw the Gauntlet to William and Kate

  • Celine Dion Brings Attention to Stiff Person Syndrome: Here's What It Is

  • Stocks Suffer Late-Day Swoon as Traders Shun Risk: Markets Wrap

  • Musk Twitter Leak Raises Concern About Outside Data Access

Prosecutors are closely examining whether hundreds of millions of dollars were improperly transferred to the Bahamas around the time of FTX's Nov. 11 bankruptcy filing in Delaware, the person said, asking not to be named without authorization to discuss the case publicly.

As Justice Department officials embark on a sweeping investigation into how FTX handled customers' cash and assets, they met this week with FTX's court-appointed overseers to discuss materials they aim to gather, the person said. They're also digging into whether FTX broke the law by transferring funds to Alameda Research, the bankrupt investment firm also founded by Bankman-Fried, an area of inquiry that has been reported previously.

Bankman-Fried, who's in the Bahamas and hasn't been charged with any crimes, has admitted to grievous managerial errors at FTX but steadfastly denied that he ever knowingly misused customers' funds. A spokesperson for Bankman-Fried declined to comment on Friday.

The New York Times reported this week that federal prosecutors are also examining whether Bankman-Fried engaged in market manipulation by orchestrating trades that led to the collapse of the TerraUSD ecosystem earlier this year.

Prosecutors in the Southern District of New York, including Assistant US Attorney Nicolas Roos, met for about two hours this week in a conference room in lower Manhattan with dozens of people investigating FTX's collapse. Potential charges were not discussed at the organizational meeting. A spokesperson for the Southern District declined to comment.

The meeting included officials from that office and the Justice Department in Washington, agents from the Federal Bureau of Investigation, and the bankruptcy team led by John J. Ray III, who was appointed FTX's chief executive officer last month. Lawyers for FTX from Sullivan & Cromwell, including former Securities and Exchange Commission enforcement director Steve Peikin and former Manhattan federal prosecutor Nicole Friedlander, were also present, the people said.

Roos helped prosecute Nikola Corp. founder Trevor Milton, who was convicted in October of misleading investors in the electric truck company.

Bankman-Fried has given a series of media interviews in the past month describing accounting mistakes that obscured the extent of FTX's ties with Alameda and the risks that created. On Friday, he said on Twitter that he's willing to testify at a Dec. 13 hearing before the US House Financial Services Committee about the disintegration of his crypto empire.

Read more: Inside Sam Bankman-Fried's Bahamian penthouse after FTX's fall

Bahamas-based FTX and more than 100 related entities, including the company's US arm, sent shock waves across the crypto ecosystem with their bankruptcy filing last month. The group and its founder now face scrutiny from regulators and prosecutors in the US and overseas.

Most Read from Bloomberg Businessweek

  • Airbus Is Coming for Boeing's 737

  • The US's New Approach to Venezuela Is Starting to Bear Fruit

  • China Is the Wild Card for Global Inflation in 2023

  • The Cult of the Retail Trader Has Fizzled

  • Some Bosses Embrace Work From Home to Keep Wages Down

©2022 Bloomberg L.P.

COMMENTS

More Related News

Adani Flagship Shelves $122 Million Bond Plan After Market Rout
Adani Flagship Shelves $122 Million Bond Plan After Market Rout

(Bloomberg) -- Adani Enterprises Ltd. has shelved a plan to raise as much as 10 billion rupees ($122 million) via its first-ever public sale of bonds...

UK Stocks Just Hit a Record. That Might Be as Good as It Gets
UK Stocks Just Hit a Record. That Might Be as Good as It Gets

(Bloomberg) -- Most Read from BloombergWhat You Need to Know About the Suspected Chinese Spy Balloon Floating Over the USTrump Offers $1 Million Bond to...

Inside the 19-Hour Meltdown That Junked Adani
Inside the 19-Hour Meltdown That Junked Adani's Share Sale

(Bloomberg) -- A beaming Gautam Adani stood beside Israeli Prime Minister Benjamin Netanyahu on Tuesday, looking relaxed as hundreds of people gathered for...

This Week in China: The World
This Week in China: The World's Best Stocks Need New Buyers

(Bloomberg) -- China's all-or-nothing stock market is losing momentum, after three months of what might be best described as forced buying of a deeply...

The White House Is Concerned About Crypto
The White House Is Concerned About Crypto

The White House published a statement warning about the risks of cryptocurrencies, pointing to last year's various collapses. I spoke to an administration...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: US