Ryan Salame, the former co-CEO of FTX’s Bahamian entity, FTX Digital Markets, tipped off the Securities Commission of the Bahamas (SCB) on Nov. 9 about FTX violating its internal procedures in transferring customer funds to its brokerage and hedge fund arm, Alameda Research, according to documents made public Wednesday.

See related article: FTX Probe Begins

Fast facts

  • “Regrettably, the commission was informed today by [Mr. Salame]…that clients’ assets which may have been held with FTX Digital were transferred to Alameda Research,” wrote SCB executive director Christina Rolle in a letter on Nov. 9, requesting an immediate criminal investigation from the Royal Bahamas Police Force.
  • “The commission understood Mr. Salame as advising that the transfer of clients’ assets in this manner was contrary to the normal corporate governance and operations of FTX Digital,” wrote Rolle, adding that the transfers “may constitute misappropriation, theft, fraud or some other crime.”
  • Salame warned the SCB on Nov. 9, only two days before FTX and its subsidiaries filed for Chapter 11 bankruptcy and Sam Bankman-Fried resigned as CEO.
  • Salame also told the commission that only three people had the necessary passwords to transfer user assets: former FTX CEO Sam Bankman-Fried, FTX co-founder Zixiao “Gary” Wang, and FTX engineer Nishad Singh.
  • The documents were revealed the same week that Bankman-Fried was arrested in the Bahamas at the request of U.S. authorities. 
  • FTX provided a US$4.1 billion bailout to Alameda in September, according to blockchain records. A portion of the bailout was comprised of user funds, according to two unnamed sources cited by Reuters.

See related article: FTX an ‘old-fashioned embezzlement’ says new CEO as US authorities charge Bankman-Fried with fraud