FTX executive Ryan Salame tipped off Bahamian regulators to possible fraud

Founder Sam Bankman-Fried is currently in a Bahamas jail after being denied bail

Sam Bankman-Fried, centre, leaves court in Nassau, Bahamas, on Tuesday, December 13, 2022. AP

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.