Several days before FTX collapsed into bankruptcy, one of Sam Bankman-Fried’s most senior executives was tipping off Bahamian authorities to possible misuse of funds at the exchange.
Ryan Salame, the former co-chief executive at FTX Digital Markets, told island regulators on November 9 that client assets were transferred to Alameda Research to “cover financial losses” at the trading company, court filings show.
Mr Salame further alleged that only three people had the ability to authorise such a transfer: Mr Bankman-Fried, former engineering executive Nishad Singh and FTX co-founder Gary Wang, according to the court filings. The Financial Times first reported on the contents of the documents.
Mr Salame indicated to the executive director of the Securities Commission of the Bahamas on a conference call that “such transfers were not allowed and, therefore, may constitute misappropriation, theft, fraud or some other crime”, the filings show.
The disclosure triggered an urgent request from Christina Rolle, the executive director, to the local commissioner of police for an investigation, according to emails included in the court filings.
Ms Rolle didn’t return an email seeking comment sent outside of normal business hours, and could not be reached by phone.
FTX experienced a bank run in the few days before Mr Salame approached Bahamian authorities. The cryptocurrency platform filed for bankruptcy on November 11.
The filings show that during that pivotal pre-bankruptcy period, Mr Bankman-Fried exchanged emails with several different Bahamian officials, including Ms Rolle and with Ryan Pinder, the attorney general.
In one email sent on the night of November 9, Mr Bankman-Fried apologised to Mr Pinder for “delayed responses” to previous messages.
In that email, Mr Bankman-Fried wrote: “It’s been a hectic week but that’s on me. Myself and Joe (cc’ed), will be responsive going forward.”
His father, Joseph Bankman, was in the CC line of the email.
In the same message, Mr Bankman-Fried wrote that FTX had “segregated funds for all Bahamian customers” and said “we would be more than happy to open up withdrawals for all Bahamian customers on FTX, so that they can, tomorrow, fully withdraw all of their assets, making them fully whole”.
Mr Bankman-Fried remains the only senior executive charged with any crimes and is facing extradition to the US from the Bahamas.
Several billion dollars worth of customer assets have disappeared, FTX’s new chief executive John Ray III said as he gave evidence before the US Congress. Some of the funds probably went to Alameda, he said.
Mr Salame didn’t return calls or messages seeking comment. Mr Bankman-Fried is currently in a Bahamas jail after being denied bail.
Mark Botnick, a representative for Mr Bankman-Fried, declined to comment. Mr Singh didn’t respond to requests for comment.
Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
Company profile
Name: Thndr
Started: October 2020
Founders: Ahmad Hammouda and Seif Amr
Based: Cairo, Egypt
Sector: FinTech
Initial investment: pre-seed of $800,000
Funding stage: series A; $20 million
Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital
MATCH INFO
Manchester United 1 (Greenwood 77')
Everton 1 (Lindelof 36' og)
If you go
The flights
The closest international airport for those travelling from the UAE is Denver, Colorado. British Airways (www.ba.com) flies from the UAE via London from Dh3,700 return, including taxes. From there, transfers can be arranged to the ranch or it’s a seven-hour drive. Alternatively, take an internal flight to the counties of Cody, Casper, or Billings
The stay
Red Reflet offers a series of packages, with prices varying depending on season. All meals and activities are included, with prices starting from US$2,218 (Dh7,150) per person for a minimum stay of three nights, including taxes. For more information, visit red-reflet-ranch.net.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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