Federal prosecutors are investigating Sam Bankman-Fried’s $400 million investment in hedge fund Modulo Capital, which is located on the same compound as FTX.
Prosecutors are investigating whether Bankman-Fried invested funds for FTX customers into Modulo Capital, while Alameda Research suffered the collapse of other crypto firms.
Investment Modulo Eye Prosecutors SBF
Prosecutors suspect that Bankman-Fried invested in the hedge fund through misappropriated FTX customer funds.
Bahamian prosecutors revealed their knowledge of the hedge fund during Bankman-Fried’s bail hearing in Nassau, Bahamas, before the extradition of former FTX CEO to the US Bankman-Fried is said to have met with Modulo founders Duncan Rheingans-Yoo and Xiaoyun Zhang during his tenure at quant trading firm Jane Street Capital. He later alleged that he invested about $300 million in the hedge fund before FTX filed for bankruptcy in November 2022.
According to the New York Timeslawyers handling FTX’s bankruptcy case have also listed the funds as a possible source of reclamation for the exchange’s bankruptcy estate.
«Focusing on large, questionable transactions with a fund, company or person closely associated with the debtor prior to the bankruptcy filing is essentially the low-hanging fruit in a bankruptcy case,» said University of Georgia bankruptcy professor Lindsey Simon.
Bankman-Fried was arrested in the Bahamas in December 2022 following the collapse of FTX, where he allegedly misused customer funds to bail out affiliated market maker Alameda Research. Former Alameda Research CEO Caroline Ellison reportedly opposed Bankman-Fried’s investment in Modulo.
Bankman-Fried now faces eight criminal charges in the United States, including wire fraud, conspiracy to commit money laundering, and political campaign finance violations. Separately, the SEC has charged an MIT alum with misappropriating $1.8 million in investor funds.
Prosecutors Will Seal Ex-CEO’s Assets Ahead of October 2023 Trial
Official prosecutors are freezing Sam Bankman-Fried’s assets in the run-up to his October 2023 trial date.
The recent prosecutors seized $50 million from Sam Bankman-Fried’s account at Farmington State Bank located in Washington state, where Alameda allegedly invested $11.5 million.
Farmington State Bank is located in Farmington, WA, a town of only 146 residents. Prosecutors are also looking into a Binance account under the name Bankman-Fried.
On Friday, January 20, 2023, officials prosecuting Bankman-Fried seized the FTX co-founder’s shares in online brokerage Robinhood Markets. About three days later, Bankman-Fried listed townhouse in Washington, DC, for $3.28 million.
Federal prosecutors’ handling of the Modulo case is likely to inform similar action regarding Bankman-Fried’s other investments, which total about $4.6 billion. The former billionaire invested in Bored Ape Yacht Clubs creator Yuga Labs and an artificial intelligence company called Anthropic.
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BeInCrypto has reached out to a company or individual involved in the matter for an official statement on the recent developments, but has yet to hear back.