Some $1.7 million in cryptocurrency vanished from a trading firm linked to FTX founder Sam Bankman-Fried just days after he was released on bail, according to reports.
Thirty cryptocurrency wallets linked to Alameda Research, the bankrupt firm run by Bankman-Fried’s ex-paramour, suddenly became active on Dec. 28 following four weeks of inactivity, according to cryptocurrency site Cointelegraph. The money was moved using “mixing services” which make it more difficult to track, the site reported.
“Currently, our compliance team is working closely with investigators to detect the flow of the illegal funds, while also keeping a close eye on alerts from the community on funds with suspicious trails,” ChangeNOW, one of the services used to move the money, said in a statement.
Alameda Research was run by Caroline Ellison, the 28-year-old one-time girlfriend of Bankman-Fried who pleaded guilty to fraud charges and is now reportedly cooperating with prosecutors. Bankman-Fried allegedly poured billions of dollars in clients’ funds deposited in his cryptocurrency exchange into Alameda. Ellison allegedly lost the money through a series of failed investments.
Caroline Ellison, the former CEO of Alameda, is facing up to 110 years in prison after pleading guilty to 7 charges including fraud in the FTX collapse https://t.co/b0cVNIlGsI
— Insider Business (@BusinessInsider) December 22, 2022
Cointelegraph reported that the movement of funds so soon after Bankman-Fried was released on bond raised suspicions in the crypto community and that it appeared that whoever moved the money took extraordinary measures to cover their tracks.
Bankman-Fried tweeted Friday in response to the article that he had nothing to do with the money movement.
“None of these are me,” he wrote. “I’m not and couldn’t be moving any of those funds; I don’t have access to them anymore.”
None of these are me. I'm not and couldn't be moving any of those funds; I don't have access to them anymore.https://t.co/5Gkin30Ny5
— SBF (@SBF_FTX) December 30, 2022
The crypto forensic group Arkham said that the first transfer began with multiple Alameda addresses swapping tokens for Ether, sending them to crypto mixers. The money was moved through multiple wallets in amounts ranging from $50,000 to $200,000, then sent to ChangeNOW and fellow mixing service FixedFloat.
Another wallet was used to swap for stablecoins before the funds were sent to Fixedfloat, Cointelegraph reported.
Bankman-Fried, 30, whose net worth was once estimated at $25 billion, was arrested in the Bahamas on fraud charges, extradited to New York, and then released last week on a $250 million bond. He did not have to put up any money under the terms but must stay at the Palo Alto, California, home of his parents, both Stanford University law professors.
Before his stunning fall from grace, Bankman-Fried was seen as a darling of the Left. He donated to a host of liberal causes, claiming to espouse a philanthropic philosophy of pursuing profits solely to give more money away. But Bankman-Fried later said he cynically adopted the Left’s language as a “dumb game we woke Westerners play,” even as he ran the company into the ground.
Thousands of investors lost their money, some their life savings, when the Bahamas-based crypto exchange collapsed. Attorney John Jay Ray III, who successfully clawed back millions of dollars for victims of the early 2000s Enron collapse, has been installed at FTX to clean up its balance sheet and return as much money as can be recovered to investors. He recently signaled he intends to force politicians who took donations from Bankman-Fried to return the money with interest.
Bankman-Fried faces up to 115 years in prison if he is convicted on all counts, which include conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering.