FTX insider turned on Sam Bankman-Fried days ahead of bankruptcy, flagging likely fraud to regulators

Times in advance of FTX’s individual bankruptcy filing last month, co-CEO Ryan Salame advised Bahamian authorities that founder Sam Bankman-Fried may have dedicated fraud by sending purchaser money from the crypto trade to his other agency, Alameda Exploration.

In accordance to a submitting on Wednesday tied to FTX’s bankruptcy proceedings, Salame disclosed “probable mishandling of clients’ assets” by Bankman-Fried. The letter integrated in the submitting was dated Nov. 9, and was despatched from the Securities Commission of the Bahamas to the commissioner of police. FTX declared bankruptcy on Nov. 11.

The disclosure on Wednesday marks the 1st community acknowledgement of an insider turning on Bankman-Fried, who was arrested in the Bahamas on Monday after the U.S. Attorney for the Southern District of New York shared a sealed indictment with the Bahamian govt. The indictment, unsealed on Tuesday, charged Bankman-Fried with 8 felony counts linked to fraud, income laundering and inappropriate use of buyer funds.

Salame explained to regulators that only 3 persons at FTX — Bankman-Fried, Nishad Singh, and Gary Wang — experienced the type of accessibility and authority to engineer the probably fraudulent transfers to Alameda, a hedge fund and investing company. Salame reported he suggested Bankman-Fried and Alameda executives that the achievable mishandling of customer resources, which have been commingled with Alameda, was contrary to “standard corporate governance.”

Salame’s LinkedIn profile says he is centered in the Bahamas. He also has a number of residences in the U.S., with houses in Massachusetts, Washington, D.C., and New Jersey. He experienced departed the Bahamas for the U.S. by Nov. 9, in accordance to the letter.

Like Bankman-Fried, Salame was a major political donor, donating $20 million to Republican triggers.

— CNBC’s Brian Schwartz contributed to this report.