US authorities may have uncovered another element of Sam Bankman-Fried’s crypto-empire.
US federal prosecutors believe Bankman-Fried has used the money from the FTX exchange to invest in the venture capital firm Modulo Capital.
SBF’s hedge fund and FTX affiliate, Alameda Research, had invested a total of $400 million in Modulo Capital in 2022; it was one of his most significant investments. The funding has attracted the attention of regulators since at the time Modulo was a relatively unknown company; strange then that he received such an amount of capitalespecially in a difficult time for the crypto markets.
Investigators believe that the investment in Modulo was made using criminal proceeds, or money stolen from FTX customers who had deposited their funds on the exchange.
Prosecutors said Modulo was a key part of the investigation, and the company’s activities are now under scrutiny by FTX attorneys. It is not yet clear what happened to the 400 million invested by SBF.
Modulo Capital was founded in March 2022 by three former executives of Jane Street, a New York-based firm that once employed Bankman-Fried and Alameda CEO Caroline Ellison. One of Modulo’s founders, Duncan Rheingans-Yoo, had only been out of college for two years; another founder, Xiaoyun Zhang (aka Lily) was a former Wall Street trader with some ties to SBF.
It also appears that Modulo ran its business from the Bahamas, from the same condominium community where SBF resided.
Also Read: BlockFi Financial Data Leaks Online, Shows $1.2 Billion FTX Exposure
Christy Goldsmith Romero, a member of the US Commodity Futures Trading Commission, recently questioned the due diligence work done by the venture capital firms that have funded FTX: “Why did they turn a blind eye to what should have been clear alarm bells?“
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