There Was a 'Whistleblower' Before FTX Bankruptcy... "Co-CEO Reported to Bahama Authorities"

[Asia Economy Reporter Jeong Hyunjin] Before the cryptocurrency exchange FTX filed for bankruptcy protection, one of its executives had already informed the Bahamian regulatory authorities about the possibility of fraudulent activities by former CEO Sam Bankman-Fried, Bloomberg reported on the 14th (local time).

[Image source=Reuters Yonhap News]

According to reports citing Bahamian court records by Bloomberg and other foreign media, Ryan Salame, co-CEO of FTX, informed the Bahamas Securities Commission on the 9th of last month, two days before the bankruptcy filing, that customer assets had been transferred to Alameda Research, an affiliate of FTX, to prevent financial losses.

Salame called Christina Rolle, Secretary General of the Bahamas Securities Commission, stating, "Such fund transfers are not permitted and therefore could be considered crimes such as misappropriation, theft, or fraud." Subsequently, Rolle requested an investigation from the Bahamas Police Force.

Salame claimed that the authority to transfer funds was held only by three individuals: former CEO Bankman-Fried, FTX’s Chief Technology Officer Nishad Singh, and FTX co-founder and CTO Gary Wang. He stated that he had advised Bankman-Fried and Alameda’s management that mixing customer funds with Alameda’s assets constituted improper management and violated 'normal corporate governance.'

According to his LinkedIn profile, Salame is based in the Bahamas but owns residences in Massachusetts, Washington D.C., and New Jersey in the United States, CNBC reported. However, he has stated that he left the Bahamas for the U.S. after the 9th of last month.

CNBC noted, "This is the first internal whistleblowing revealed after the U.S. Southern District of New York indicted Bankman-Fried on eight criminal charges including fraud, money laundering, and misappropriation of customer funds," but also pointed out that "like Bankman-Fried, Salame was also actively lobbying political circles, donating $20 million (approximately 26.04 billion KRW) to the U.S. Republican Party."

Earlier, Bankman-Fried was arrested in the Bahamas on the 12th, one month after FTX filed for bankruptcy protection last month.