Bahamian authorities were tipped off by Bankman-Fried’s top associate

One of Sam Bankman-Fried’s close aides told Bahamian regulators in the days before FTX’s collapse that the now-disgraced founder likely funneled client money to his hedge fund, a move that contributed to accelerating the fall of the thirties.

Ryan Salame, co-general manager of FTX’s Bahamas operating entity, advised the country’s securities commission on Nov. 9 that funds from FTX clients had been used to cover Alameda Research’s losses, according to sources. Bahamian court records.

Salame identified Bankman-Fried and two other FTX executives as potentially responsible, an allegation that prompted a referral to Bahamian police and ultimately the appointment of liquidators.

The previously unreported contact between Salame and the Bahamian Securities Commission is the first known instance of a senior Bankman-Fried associate helping government authorities shut down an alleged years-long massive fraud.

The fact that only Bankman-Fried has been charged so far has fueled speculation that several business associates may be cooperating with prosecutors.

Bankman-Fried was charged by the US Department of Justice and arrested by Bahamian police on Monday pending possible extradition to the United States. Prosecutors called his case “one of the biggest financial frauds in American history.”

Now in a Bahamian jail after being denied bail, Bankman-Fried is accused of defrauding FTX customers by funneling billions of dollars to his trading company Alameda and spending the money as if it was his. He denied any intentional wrongdoing.

The charges include an allegation that Bankman-Fried conspired to violate US campaign finance laws by donating through anonymous co-conspirators. He was one of the biggest Democratic donors in the 2021-22 election cycle with $39 million in known donations. Salame was a big Republican donor, giving more than $20 million.

The Bahamas Securities Commission did not immediately respond to a request for comment. A lawyer for Salame declined to comment.

FTX was once valued at $32 billion and had the backing of blue chip investors such as Sequoia Capital. The business collapsed in just a week in early November as customers attempted to withdraw their money from the exchange.

Once the third-largest cryptocurrency exchange, FTX along with its US operations and Alameda were placed in Delaware bankruptcy proceedings on Nov. 11 after Bankman-Fried ceded control to restructuring specialist John Ray.

Securities regulators in the Bahamas, where FTX was headquartered, filed for interim liquidation of its local operating company FTX Digital Markets on November 10.

The two competing insolvency processes have since clashed, with Ray’s team alleging the Bahamas improperly transferred FTX’s assets, a claim the liquidators have strenuously denied.

Salame’s disclosures to the Bahamas Securities Commission were revealed Wednesday in a US court filing filed by the Bahamas liquidators. The liquidators submitted a copy of the commission’s petition to the Supreme Court of the Bahamas to put FTX Digital Markets into liquidation.

The app shows Salame spoke with Bahamian Securities Commission Director Christina Rolle on Nov. 9. The same day, Rolle sent a referral to the Royal Bahamas Police Force citing Salame’s information.

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