US prosecutors are reportedly assembling a potential fraud indictment against disgraced crypto tycoon Sam Bankman-Fried – and speculation is mounting that his ex-girlfriend Caroline Ellison could be a sucker in the case.
Justice Department officials for the Southern District of New York are reportedly looking into the alleged transfer of hundreds of millions of dollars from the United States to the Bahamas just as its cryptocurrency exchange FTX filed for bankruptcy protection in under Chapter 11, according to Bloomberg News.
Federal prosecutors in Manhattan are also investigating whether Bankman-Fried manipulated the crypto markets by orchestrating deals that led to the collapse of the TerraUSD cryptocurrency earlier this year. according to previous reports.
Meanwhile, Ellison, the former CEO of FTX’s sister hedge fund Alameda Research, reportedly spotted having coffee at a restaurant in Manhattan’s Soho last week – and hired Wilmer Hale law firm partner Stephanie Avakian, former head of the enforcement division at the Securities and Exchange Commission, Bloomberg reported separately.
The Post has sought comment from Wilmer Hale.
While Bankman-Fried has given several interviews and posted frequently on social media in recent weeks, Ellison has remained silent, leading some observers to believe she was seeking to cooperate with authorities.
Last month, Bankman-Fried launched a wild and wide-ranging interview in which he appeared to blame the collapse of FTX on Ellison – a 28-year-old “Harry Potter” enthusiast who has tweeted about taking amphetamines. Bankman-Fried insisted in an interview with Vox Reporter Kelsey Piper that his assertion that FTX did not “invest client assets” was “factually accurate” because Alameda Research, not FTX, actually made the investments.
Bankman-Fried and Ellison were reportedly among a group of 10 housemates who controlled operations at FTX and Alameda from a penthouse in the Bahamas. The group was said to be romantically entangledwith speculation online that they were a “polycule” or network of polyamorous relationships.
FTX allegedly used billions of dollars in client funds to cover debt incurred by Alameda Research, setting off a chain of events that led to its sudden implosion last month. On November 11, several crypto watchers noticed that some $663 million had been suspiciously moved from digital wallets controlled by FTX to a fund managed by Bahamian authorities.
The Bahamas Securities Commission issued a statement on Nov. 17 saying it ordered the transfer of funds to its own digital wallet “for safekeeping.”
Investigators are also looking into whether FTX engaged in criminal behavior by using client funds to cover debts incurred by Alameda Research, the sister analytics firm also founded by Bankman-Fried, Bloomberg News reported.
Bankman-Fried attorney Mark Cohen and Bankman-Fried spokesman Mark Botnick both declined to comment.
In recent media interviews, Bankman-Fried denied knowingly committing fraud.
Bankman-Fried Said He Takes Responsibility For FTX’s Collapse And Didn’t Get It the amount of risk based in the Bahamas FTX and Alameda were underway in both companies.
One of the charges against Bankman-Fried is that he arranged for Alameda to use client assets in FTX to place bets in the market. Bankman-Fried has said in public interviews that he did not “knowingly” commingle client assets with Alameda.
“I didn’t know exactly what was going on,” Bankman-Fried told the New York Times DealBook Summit last month.
“I learned a lot of those things as I went along.”
Last week, Bankman-Fried tweeted that he’s ready to testify before Congress on Tuesday, but will be limited in what he can say and “won’t be as helpful” as he would like. .
The tweet came in response to several tweets earlier this month from House Financial Services Committee Chair Maxine Waters (D-California) who requested that Bankman-Fried attend Tuesday’s hearings. on the collapse of FTX.
Waters said in a series of tweets to Bankman-Fried that based on multiple media interviews since FTX’s collapse, it was “clear to us that the information you have so far is sufficient to testify.”
FTX failed last month in what was essentially a cryptocurrency version of a bank run, when customers attempted to withdraw their assets all at once due to growing doubts about the financial strength of the company and Alameda Research.
Since its collapse, FTX’s new management has called the management of the cryptocurrency exchange a “complete failure of corporate controls.”
In a series of tweets to Waters, Bankman-Fried listed specific issues he could discuss with the committee, including the creditworthiness of FTX’s U.S. operations, its U.S. clients, and possible solutions for returning assets to international clients.
He also said he could talk about what he thought led to accident and “my own faults”.
In a TV interview just over 10 days ago, Bankman-Fried said he largely believed the US subsidiary of FTX was fully solvent and could start processing withdrawals immediately.
As for the rest of FTX, which was significantly larger than the US division, he said the fate of client funds was largely beyond his control.
Bankman-Fried, who was once one of the richest people in the world on paper, now says he gets by with just one credit card and probably has less than $100,000 to his name after FTX fails.
With post wires