Prosecutors are closely examining whether hundreds of millions of dollars were improperly transferred to the Bahamas around the time FTX filed for bankruptcy in Delaware on Nov. 11, the person said, asking not to be named without authorization to publicly discuss the case.
As Justice Department officials embark on a thorough investigation into how FTX handled clients’ cash and assets, they met with FTX’s court-appointed supervisors this week to discuss the materials they plan to collect, the person said. They are also investigating whether FTX broke the law by transferring funds to Alameda Research, the bankrupt investment firm Bankman-Fried also founded, an area of inquiry that has been reported previously.
Bankman-Fried, who lives in the Bahamas and has not been charged with any crimes, admitted to serious managerial mistakes at FTX, but has staunchly denied knowingly misusing client funds. A Bankman-Fried spokesman 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.
New York’s Southern District prosecutors, including Assistant U.S. Attorney Nicolas Roos, met for about two hours this week in a conference room in Lower Manhattan with dozens of people investigating the FTX crash. Any charges were not discussed during the organizational meeting. A Southern District spokesman declined to comment.
The meeting was attended by 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 named chief executive officer of FTX last month. Also in attendance were Sullivan & Cromwell’s FTX attorneys, including former Securities and Exchange Commission enforcement director Steve Peikin and former Manhattan federal prosecutor Nicole Friedlander, the people said.
Roos helped prosecute Nikola Corp. founder Trevor Milton, who was convicted in October of deceiving investors in the electric truck company.
Bankman-Fried has given a series of media interviews over the past month describing accounting errors that have obscured the extent of FTX’s ties to Alameda and the risks they created. Friday, he said Chirping who is willing to testify in a Hearing of 13 December before the US House Financial Services Committee on the disintegration of its crypto empire.
The Bahamas-based FTX and more than 100 related entities, including the US arm of the company, sent shockwaves through the crypto ecosystem with their bankruptcy filing last month. The group and its founder now face scrutiny from regulators and prosecutors in the United States and abroad.
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